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Sterling Ends the Week Higher but Worsening Coronavirus Fears Taking Market Focus

Published: 10 Jul at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)

The Pound saw yet another week of recovery over the past week. Hopes for Brexit developments and some reaction to UK fiscal stimulus plans helped Sterling to firm a little higher. Hopes that UK economic activity will improve as more of the economy reopens is also supporting the currency.

No notable UK data will be published on Monday, but it will be a busy week for UK data overall. Of course with July almost half way over, Brexit negotiations could also come into new focus for GBP/

Euro (EUR)

The Euro has seen more mixed movement over the past week. While the Eurozone outlook is optimistic and investors expect the EU Recovery Fund to eventually bear fruit, the shared currency slipped from its highs against some majors due to ‘second wave’ coronavirus fears.

One of the biggest events of the coming week will be the European Central Bank’s (ECB) July policy decision. If the ECB takes a more cautious tone due to swecond wave fears, the Euro could weaken.

US Dollar (USD)

Safe haven demand has not been enough to help the US Dollar hold its ground this week. While safe haven demand is rising, the US Dollar’s appeal is being limited more by surging coronavirus cases in the US, as well as overall US political uncertainty.

Developments in the US coronavirus situation and risk-sentiment will continue to drive the US Dollar throughout the next week.

Australian Dollar (AUD)

The Australian Dollar saw one of its worst performances in a while last week. Market risk-sentiment is weakening as ‘second wave’ fears rise, and a pandemic lockdown in the Australian State of Victoria is further weighing on the ‘Aussie’ outlook.

Further developments on Australia’s coronavirus situation, as well as shifts in market risk-sentiment, are likely to drive the Australian Dollar next week.

New Zealand Dollar (NZD)

The New Zealand Dollar didn’t tumble as much as other risk-correlated currencies last week. This is because markets are still generally optimistic over New Zealand’s coronavirus situation, despite market risk-sentiment weakening.

New Zealand inflation data is due next Thursday. Besides that though, the New Zealand Dollar’s movement is more likely to be driven by market shifts in risk sentiment.

Canadian Dollar (CAD)

While Canada’s latest job market report impressed investors on Friday, the Canadian Dollar still weakened against the Pound. The Canadian Dollar is correlated to risk and oil sentiment, so recent coronavirus jitters have weighed heavily on it.

The Bank of Canada (BoC) will hold its July policy decision next week. A more optimistic tone from the BoC could help boost Canadian Dollar support.
As of Friday, 10th July 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.117, GBP USD exchange rate was 1.2623, GBP AUD exchange rate was 1.8167, GBP NZD exchange rate was 1.9201, and GBP CAD exchange rate was 1.7161.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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