Daily Currency Update
GBP - British PoundThat was the dovish message from Fed Chair Jerome Powell last night as he explained to the market that interest rates in the US will remain ultra low until 2022, at least. In terms of the details the Fed will continue to purchase treasuries and mortgage backed securities at its current pace of $45bn and $80bn per month respectively, whilst they also forecast that inflation will struggle to break 1.6% by 2021. Also, unemployment levels will flatten out at a whopping 6.5%, double the pre-covid level. All of this has spelled terrible news for the USD which has weakened against a raft of currencies particularly the Swiss Franc and Japanese Yen. GBPUSD also managed to benefit to a degree although the pound did not shower itself in glory yesterday as it generally weakened across the board. Could the dollar be on rocky ground for the long term? Quite possibly, especially with the election later in the year adding another risk event and reports that virus levels are resurging in parts of the US.
Key Movers
The poor performance from sterling yesterday was partly driven by a report from the OECD that the UK will suffer the worst damage among all the countries in the developed world. Early tomorrow morning we have last month's GDP figures to gauge if the OECD are correct or not. It’s a big day in Europe today with European finance minsters set to meet to discuss the EU recovery fund in all of its detail. The market will be looking to see if countries such as the Netherlands and Austria will follow the example of Denmark and reconsider the matter of grants being issued to heavily struck nations.
Expected Ranges
- GBP/USD: 1.2650 - 1.2820 ▲
- GBP/EUR: 1.1100 - 1.1240 ▼
- GBP/AUD: 1.8200 - 1.8300 ▲
- GBP/NZD: 1.9460 - 1.9560 ▲
- GBP/CAD: 1.7020 - 1.7140 ▲