After falling on Tuesday morning after the UK’s public deficit widened further than expected, the Pound (GBP) found its legs in the afternoon and rallied against the majority of its peers.
The rebound appeared to be thanks to traders rushing to take advantage of the Pound’s weakness at the start of the week.
Meanwhile with all election campaigning suspended in the wake of the Manchester terror attack GBP investors are likely to look to tomorrow’s growth data, which is expected to confirm that the UK’s GDP sank from 0.7% to 0.3% at the start of the year.
The Pound Euro (GBP EUR) exchange rate touched a near two-month low on Tuesday after the UK’s budget deficit surged more than expected last month.
However the pairing rallied in the afternoon over concerns for the Greek Debt talks after they appeared to stall on Monday, increasing the pressure on negotiations to come to an agreement before Greece’s next debt repayment in July.
The single currency may be forced to cede more ground this afternoon following a speech by European Central Bank (ECB) President Mario Draghi who is expected to remain dovish towards possible rate hikes, despite the continued improvement in Eurozone data.
Sterling fluctuated against the US Dollar (USD) yesterday after the Manchester attack and UK Public Borrowing figures prompted volatility in the markets.
The Pound briefly spiked in the afternoon after US data showed that New Home Sales fell further than expected in April, slumping from 642,000 to 569,000, before the pairing slipped again as the US Services PMI beat expectations.
USD investors will be awaiting the FOMC minutes from the most recent Federal Reserve meeting this evening, with the US Dollar likely to rise if it hints towards a rate hike next month.
The Pound Canadian Dollar (GBP CAD) exchange rate bounced back from a weekly low on Tuesday as the recent drop in sterling made it more attractive to investors.
Meanwhile, the ‘Loonie’ may slide again this afternoon as the Bank of Canada (BoC) gathers for its latest policy meeting, with CAD likely to soften if the central bank hints that interest rates will stay unchanged for the foreseeable future.
Sterling rallied against the Australian Dollar (AUD) overnight on Tuesday following the release of disappointing construction data from the ABS as activity slumped from 0.6% to -0.7% in the first quarter, with economists suggesting that this may be a sign that the Australian economy contracted at the start of 2017.
New Zealand Dollar
The Pound also began to trend higher against the New Zealand Dollar (NZD) on Tuesday, recovering from a one month low as markets calmed following the Manchester bombing.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Last update: 22 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020