Daily Currency Update
GBP - British PoundYesterday the UK government confirmed what everyone knew - that the UK lockdown would be extended for at least another three weeks until May 7th. However, with that weekend being a bank holiday in the UK there are questions as to whether the government will open up the country again or look to extend the lockdown for another shorter period. The pound yesterday saw losses against the USD in the face of wide spread USD strength and it continues to be at the mercy of swings in investor risk on/risk off sentiment. Before we head into the weekend though it is worth mentioning though that the UK apparently will be unwilling to extend any transition period with the EU as this would cause uncertainty for businesses. These words from government spokesman James Slack tow the old Brexit party line but there is still a long way to go in negotiations and possible further fallout from the coronavirus. As mentioned yesterday we expect the transition period to be extended.
Key Movers
The USD reigned supreme yesterday soaring against all its G10 peers even in the fact of further dire unemployment claims figures. Another 5.2m people filled for unemployment benefits last week bringing the total above 22m which means that all the jobs that the US has created since the GFC have been erased in the space of four weeks. Naturally, but in the face of the continued spread of Covid 19, US President Trump is keen to get the US economy back up and running sooner rather than later. At the start of the year in a life before coronavirus, Trump was a strong favourite to secure a second term in the White House come November and the strong US economic performance under his leadership was expected to deliver this. However, these cards have been removed from Trump's hand. Instead he now faces a constitutional battle with US governors as to when to re-open the country.Away from this, overnight China reported its latest GDP figures which showed the country contracted by 6.8% on an annualised basis, making it the biggest drop since 1976 or the Cultural Revolution. Despite this though, two of our most watched currencies; the Aussie and New Zealand dollar, which are hugely reliant on Chinese demand, have opened stronger than expected.
Expected Ranges
- GBP/USD: 1.2290 - 1.2520 ▼
- GBP/EUR: 1.1450 - 1.1520 ▲
- GBP/AUD: 1.9550 - 1.9700 ▼
- GBP/NZD: 2.0700 - 2.0890 ▼
- GBP/CAD: 1.7500 - 1.7650 ▼