Pound Slides as Covid Fears Grow ahead of UK Reopening

Pound (GBP) Slips as Daily Covid Cases Hit 51,000

The Pound (GBP) slipped against most of its major rivals on Friday as Covid concerns grew ahead of the UK’s reopening.

The number of daily confirmed cases rose above 51,000 on Friday. Paired with Thursday evening’s warning from Chris Whitty – the government’s chief medical adviser – this created a strong headwind for Sterling.

While most remaining restrictions have been lifted today, concerns over the rapid rise in Covid cases and high numbers of workers being told to isolate could weigh on the Pound, which has hit a three-month low against the US Dollar (USD) this morning.

Euro (EUR) Gains despite Easing Inflation

The Euro (EUR) firmed through Friday’s session, despite some disappointing data from the Eurozone.

The bloc’s trade surplus narrowed by €3.4bn, wildly off forecasts of a €5.5bn increase. Additionally, the Eurozone’s inflation rate dropped from 2% to 1.9%, which supports the European Central Bank’s (ECB) dovish view of inflationary pressures as transitory.

However, the Euro managed to gain ground, though it’s not clear what drove the currency’s upside.

With no market-moving data to support the single currency today, it could be mostly influenced by European coronavirus news and USD demand.

US Dollar (USD) Flat on Lacklustre Data

The US Dollar traded mostly sideways at the end of last week, following some mixed data releases from the US.

Retail sales in June beat expectations of a 0.4% contraction to increase by 0.6%. However, the previous month’s figures were revised from -1.3% to -1.7% – a larger decline in sales than earlier estimates. In addition, US consumer sentiment for July unexpectedly dropped.

Meanwhile, a risk-off shift in market mood buoyed the ‘Greenback’, limiting potential losses.

In the absence of any major data releases today, global risk sentiment may drive most movement in USD, with concerns over the global economy and Covid likely to be supportive of the safe-haven currency.

Canadian Dollar (CAD) Subdued as Oil Prices Stay Low

The Canadian Dollar (CAD) remained muted on Friday, with the commodity-linked ‘Loonie’ suffering from a recent drop in oil prices as the OPEC+ plans to increase oil production.

With no data out from Canada today, the price of oil will likely continue to drive most movement in CAD.

Australian Dollar (AUD) Muted by Downbeat Market Mood

The Australian Dollar (AUD) was fairly subdued in overnight trade, as a souring market sentiment weighed on the risk-sensitive ‘Aussie’.

New Zealand Dollar (NZD) Strengthens on Services PMI

The New Zealand Dollar (NZD) trended higher overnight, as the New Zealand services PMI came in higher than expected to show a surprise increase in service sector activity.