Pound US Dollar Soars Near Key Breakthrough Level on UK Reopening Hopes

GBP Surges on Lockdown Easing Speculation, Pound US Dollar Hits $1.40

The Pound roared higher against the US Dollar and Euro during yesterday’s trading session. The continued improvement in UK coronavirus statistics bolstered hopes for a relatively swift reopening of the economy.

This was further bolstered by reports that Chancellor Rishi Sunak has opted to defer plans for significant tax rises in his upcoming budget in favour of offering more fiscal support to the UK’s economic recovery.

However, robbing the Pound of some of its momentum this morning was the publication of the UK’s latest retail sales figures, which reported sales growth plunged a whopping 8.2% in January.

Meanwhile, the UK’s latest PMI figures released this morning could temper Sterling weakness as both the manufacturing and services PMIs bettered expectations. The services PMI particularly surprised by jumping from 39.5 to 49.7, close to the 50 mark that signifies the difference between contraction and expansion.

With the data suggesting the UK’s downturn wasn’t as bad as feared in February, the Pound to US Dollar hit $1.40 before retreating and holding just below the key breakthrough level.

Euro Buoyed by USD Weakness

The Euro (EUR) managed to stage a recovery on Thursday, with the currency’s negative correlation with the US Dollar allowing it to strengthen as the latter weakened.

Aiding this recovery was also the publication of the latest Eurozone confidence index, which printed slightly above expectations this month.

Coming up, EUR investors will be closely watching the Eurozone’s own PMI release this morning. Will another stronger-than-expected reading help to boost the Euro today?

US Dollar Slumps on Disappointing Jobless Figures

The US Dollar (USD) suffered a sharp selloff yesterday as another disappointing jobless claims release saw US Treasury yields pull back from their recent highs.

US jobless claims reportedly rose by 861,000 for the week ending 12 February, with the previous week’s figures also being revised higher and raising concerns over the strength of the US jobs market.

Turning to today’s session, it’s likely the direction of the US Dollar will continue to be driven mostly by US bond yields, which could lead to a rebound if there are any positive stimulus developments.

Canadian Dollar Steady as Oil Consolidates Above $60

The Canadian Dollar (CAD) was mostly stable on Thursday, with the commodity-linked currency able to hold steady as WTI prices consolidated this week’s gains, offsetting an abysmal ADP employment report.

Looking ahead, the ‘Loonie’ could face some pressure later this afternoon, however, as Canada’s latest retail sales figures are expected to report a sharp drop in sales growth at the end of 2020.

Australian Dollar Advances in Spite of Lacklustre Retail Sales

The Australian Dollar (AUD) trended higher overnight, with the risk-sensitive ‘Aussie’ able to find some support amidst a weakening of the US Dollar in spite of domestic retail sales printing below expectations in January.

New Zealand Dollar Strengthens Following Dip in USD

The New Zealand Dollar (NZD) also made some modest gains overnight on Thursday, with the drop in the US Dollar offering the high-yield ‘Kiwi’ some room to breathe after two sessions of consecutive losses.

Matthew Andrews

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