GBP - British Pound
Yesterday the legs of the recent market rally were cut out from under investors as concerns over US infection rates filtered through the market. Whilst rates across the country remain relatively benign key populous states such as California, Texas and Florida all have seen cases pick up since lockdown restrictions were eased before Memorial Day. As such the Dow Jones, S&P 500 and Nasdaq all tumbled (alongside the FTSE) with the Nasdaq dropping from its recent all time highs.
In the currency sphere this saw a rush back into the classic safe haven currencies of the Swiss Franc, Japanese Yen and even the US Dollar which reminded everyone that it is still part of the safe haven pack. The antipodean currencies were amongst the worst hit on the other side of the trades with the Aussie dollar losing almost two cents against its US Dollar counterpart.
But what about UK GDP figures and why hasn't this been mentioned first? April saw the UK economy contract by a whopping 20.4% which is three times greater than the contraction seen across the whole 13 months of the GFC between 2008-2009. In one month the UK economy lost £30 billion.
However the reaction in the currency space has been limited in comparison to some of yesterday's moves, or at least so far. At the time of writing, sterling has shrugged off the early loses against the USD and is down marginally against the Euro. But why is this the case? Well whilst the contraction is unprecedented it wasn't far off what the market was anticipating (-18.6%) and there is an argument to suggest that investors have become insensitive to the big market shocks recently. Next week is looking like a pretty significant week though with CPI and the Bank of England update so we will have to wait and see if the pound has any life in it left whatsoever.
1.2550 - 1.2680 ▲GBP/EUR:
1.1090 - 1.1160 ▼GBP/AUD:
1.8295 - 1.8400 ▼GBP/NZD:
1.9500 - 1.9630 ▼GBP/CAD:
1.7110 - 1.7180 ▼