Daily Currency Update

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Forecasts take the headline

GBP - British Pound

Yesterday the UK's Office for Budget Responsibility released a damning forecast that could see the country's GDP contract by 35% in Q2 should the lockdown last three months followed by three months of partial restrictions. This stark headline, which was also accompanied by forecasts from the IMF which indicates global GDP to drop by 3% in 2020, was largely ignored by investors who instead look to coronavirus related figures.

With regards to this both the Euro and GBP fared well yesterday and it now appears that several European countries are turning a corner. Indeed Angela Merkel is set to hold discussion today about the process to re-open Germany and factories could start work again by next week. Indeed GBP/USD finished almost 1% up yesterday as investors fled the safe haven USD in search of returns elsewhere although the mood looks slightly more bleak this morning.

Key Movers

It doesn't take long for scepticism to creep into the minds of investors and that is certainly what happened overnight. Despite the agreement at the weekend among the OPEC+ nations oil prices have dropped 7% to a two week low. The move is now driven by a fear that demand will be so low this year prices will be dampened. This does not spell good news for the Canadian dollar either which is hugely reliant on oil prices and oil exports as it has already slipped nearly 1% against its US counterpart this morning. The Bank of Canada meet again this afternoon and investors will be looking closely to see if they cut rates for a fourth time to below 0.25%.

Expected Ranges

GBP/USD: 1.2450 - 1.2650 ▼

GBP/EUR: 1.1400 - 1.1520 ▼

GBP/AUD: 1.9600 - 1.9790 ▲

GBP/NZD: 2.0650 - 2.0880 ▲

GBP/CAD: 1.7500 - 1.7600 ▲