GBP - British Pound
Matt Hancock and the UK government have found themselves criticised by the public for lack of testing and for the shortage in PPE for key essential workers. He has now decided it best to begin testing UK households in order to gain an insight in the trajectory of the disease and how far it’s spread through the UK. Tests will measure the COVID-19 status of 20,000 UK households. Hancock will use the results to help the ONS and Oxford University in their goal to find a vaccine. The pound still remains muted in movements however is that all about to change? PM Johnson is approaching his deadline to apply for an extension to the Brexit process. It is likely the pound will start to feel the pressure in the coming weeks as coronavirus has thrown a huge spanner in the works for Boris’ Brexit timeline. Last we heard, the UK still fully intends on walking without a deal from its largest trading partner and therefore Johnson must seek an extension by it’s June deadline, else Johnson will have a 6 month window to negotiate something that, in an ideal world, would take years.
We’ve already seen a large European data release this morning, as we’ve been given a clearer insight into the effect COVID-19 has had on the EU. After the US, the 5 nations most plagued by the virus are all large European players. French, German and European services and manufacturing PMIs all came in worse than forecasted and all highlighting a worrying contraction in those sectors. It seems the time has come for the EU to further combat the virus through the use of economic stimulus. The Northern states are set to encourage a one-trillion-euro-plus coronavirus recovery fund at Thursday’s EU Summit, however there is growing support for the funds to come from the EU’s budget rather than through joint bond issuance.
The Dollar found itself slipping against commodity currencies as oil prices begin to bounce. It seems a resurgence in oil was a confidence booster for traders, as some leave their US Dollar safety net for more risky positions. USD fell 0.7% against NOK, 0.3% against CAD and 0.8% against the Russian Ruble as oil dependent economies took a sigh of relief. There is chance for further US erosion today as we see US jobs data and manufacturing PMI released. Both are expected to grab headlines as the world’s largest economy feels the full force of the global pandemic.