GBP - British Pound
There wasn’t a lot to report yesterday but sentiment is up and risk is back on the table. The S&P 500, a key barometer of risk, has now erased all of its loses for the year and Asian equities overnight were up and it looks like European ones are too. This is all off the back that it looks like some of the worst numbers in the UK and US may be behind us, in particular London and New York which were two previous virus epicentres.
All of this has meant that the US Dollar is still having a bit of a torrid time and GBPUSD was able to ebb out some more gains given the USD weakness. Be wary though that the pound seems somewhat inflated and still at a huge risk to any Brexit negative developments.
As mentioned all eyes are on the Fed this week but the expectation is that they will not send any significant new signals at the Wednesday meeting. After 2008, the Fed did not hike rates until 2015 and when unemployment was around 5%. Before this they did slowly unwind its QE programme.
Further afield the antipodean currencies are benefiting from improved Chinese trade data and the fact that New Zealand is now totally back open and running. The run in the Aussie dollar though may be limited especially when you dig down into the details of the Chinese trade data (obviously any data from China is very significant to Australia/New Zealand given the extensive trade relations). Whilst the headline figure out of China showed a widening trade surplus, this was a bi-product of very low prices on imports into the country.
1.2660 - 1.2750 ▼GBP/EUR:
1.1200 - 1.1280 ▼GBP/AUD:
1.8150 - 1.8300 ▲GBP/NZD:
1.9380 - 1.9500 ▲GBP/CAD:
1.6960 - 1.7040 ▲