Dollar pares some of its losses
Wednesday 2 September, 2020
Daily Currency UpdateGBP - British PoundIts a crucial week for the pound as parliament returns and many schools go back to class after a six-month Coronavirus enforced closure. All eyes will be on how the return for pupils across the country is managed with many parents still concerned about the safety of their children and whether it could lead to a rise in infections. Almost all schools in England and Wales are starting again this week or next with them being prioritised to being kept open should other parts of the economy have to close again. Despite this and the ongoing gap between the UK and the EU over a future trade arrangement, sterling remains well bid with GBP/USD touching 1.34 yesterday. However it has since retraced a touch to currently sit around the 1.3350 handle. As well as ongoing Coronavirus concerns, next week will see the next round of talks between the UK and EU over a future trade arrangement. This could see sterling wobble as we near the end of year deadline for getting a deal done. UK PM Boris Johnson has stated he wants to see the easiest parts of the deal done with the trickier parts being ironed out afterwards rather than proceed with the EU's tactic of getting everything covered off at once. Its likely we will see sterling wobble should next week's headlines highlight no closing of the divide between the two sides.
Key MoversThe dollar has recouped some of its huge losses seen of late on the back of a very dovish Federal Reserve that has indicated it may be several years before we see any tightening of policy from the world's biggest central bank. Aiding its fightback was a better than predicted US ISM Manufacturing PMI which posted 56 rather than the 54.6 eyed. Today sees the ADP employment figure from the States ahead of another much awaited Non-Farm Payrolls number due on Friday. The consensus is for around 1.4m to be added to the workforce for August and the unemployment rate to drop back under 10%. Should we see a better than expected result it will likely bolster President Trump's re-election campaign as he continues to lag Democrat, Joe Biden in the polls.EUR/USD has slipped back as the dollar regains some ground. After briefly breaking above 1.20 yesterday its back to around 1.1870 as profit taking and some strength returns to the greenback. Also adding some downward pressure to EUR/USD was the European Central Bank's, Chief Economist, Philip Lanes commenting that the exchange rate matter to the bank's rate setting committee sending the shared currency lower.
- GBP/USD: 1.3470 - 1.33 ▼
- GBP/EUR: 1.1180 - 1.13 ▲
- GBP/AUD: 1.8090 - 1.8270 ▲
- GBP/NZD: 1.9690 - 1.9880 ▼
- GBP/CAD: 1.7360 - 1.7520 ▼