Daily Currency Update

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Safe-haven USD continues to gain as Covid-19 cases increase around the world

GBP - British Pound

GBP/USD has continued to trade lower through yesterday and overnight after the UK’s Chief Brexit negotiator refused to agree to a compromise on tariffs. While the focus remains largely with the battle against the coronavirus, there is still a long way to go before the UK leaves the EU at the end of the year and further delays/setbacks in divorce negotiations are adding further downward pressure on the GBP.

As mentioned earlier this week, Risk aversion is in full swing with currencies extending their slide on Thursday after the US reported its single biggest increase in COVID-19 cases ever. The rapid spread of new infections across a swathe of US states, with Texas and North Carolina forced to suspend plans to re-open their economies and instead impose new measures to try and control their respective outbreaks, has prompted investors to begin re-assessing expectations for a prompt rebound in economic activity.

On the data front, the US posted a mixed bag of figures with core durable goods orders coming in above expectations at 4.0% vs 2.1% predicted, while jobless claims increased beyond expectations, with over 1480K people filing for state unemployment insurance.

Looking ahead to today’s data docket, the UK Bank of England posts its Quarterly bulletin at 11am while the afternoon sees the US post Personal Income, spending and consumption figures for May.

Key Movers

The Euro also experienced a tough day of trading yesterday with EUR/USD falling to an intraday low of 1.1205. Aside from the US’ tariff threat on the EU, the ECB Monetary Policy meeting minutes, released yesterday, suggest there’s no exit from Quantitative Easing anytime soon. The minutes also indicate policymakers see weakening price pressures, downside growth risks and weak demand. As such it’s likely we will see further downside for the single currency in the short term.

On a lighter note, the Australian dollar crept higher through Thursday following the news that Australia saw its largest drop ever in job vacancies for the 3 months up to May. The AUD gains were marginal however as investor attentions remain squarely affixed to the largely unchecked spread of COVID-19 throughout the US, Latin America and South Africa.

As such markets appeared reluctant to extend gains across commodity currencies and risk assets, leaving equities, the AUD, NZD and CAD mostly flat on the day.

Expected Ranges

GBP/USD: 1.2335 - 1.2450 ▼

GBP/EUR: 1.0985 - 1.1115 ▼

GBP/AUD: 1.7965 - 1.8125 ▼

GBP/NZD: 1.9175 - 1.9325 ▼

GBP/CAD: 1.6865 - 1.70 ▼