GBP - British Pound
Last week was a mixed bag for the pound with a trading range of GBP/USD 1.2740-1.3050. This week already looks far more optimistic for the British currency as it topped out just below the 1.32 handle on the back of a number of global issues. Coronavirus continued to plague markets as Italy decided it was best to quarantine over 16m people across some of the largest cities in the northern region. At the same time, oil producing nations (Saudi Arabia/Russia) were forced into a price war causing oil to crash from highs of $60 per barrel to $32 per barrel this morning. The FTSE 100 also dipped 20% from its recent peak. Brexit negotiations will certainly play a less important role in driving currency as governments look to combat the economic slowdown through both monetary and fiscal stimulus. Wednesday is a huge day for British data as Sunak releases the UK Annual Budget. Alongside this, we will see monthly manufacturing production and monthly GDP figures released.
Global markets plummeted on Monday morning as a result of global economic concerns. Oil crashed, tech stocks crashed, and economic optimism disintegrated as markets are plagued. The Japanese Yen and Swiss Franc soared (safe haven currencies) whilst the US Dollar, Canadian Dollar and Australian Dollar crashed. The Canadian and US Dollar tumbled on the back of oil price slips and USD further worsened as investors priced in a 75bps interest rate cut from the Fed in the next month or two. Trump is turning to fiscal stimulus in the attempt to further offset the expected economic slowdown. The Aussie Dollar depends heavily on the Chinese economy, which has taken a pounding over the last two months. FX markets are notoriously fickle however it’s looking more and more as though there are underlying fundamental issues with a number of the world’s largest economies, that'll need more than a rate cut to harmonize.