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‘Kiwi’ and ‘Aussie’ Rise as Covid-19 Infection Rate Appears to Slow

Published: 17 Feb at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, France, Germany,

Pound Sterling (GBP) Slides as UK and EU Will ‘Rip Each Other Apart’

On Monday, Prime Minister Boris Johnson’s spokesman said that the UK does not need any special arrangements in its future relationship with the EU. The spokesman also added that the UK wanted a relationship based on friendly cooperation and that it is ready to begin trade negotiations.

However, this did little to support Sterling at the end of the week.

The Pound remained under pressure after France’s Foreign Minister, Jean-Yves Le Drian said that the UK and EU would ‘rip each other apart’ during trade negotiations.

Looking ahead, Sterling could edge higher on Tuesday following the release of UK employment and wage growth data. If unemployment remains at the lowest since 1975, and wage growth rallies, GBP will edge higher.

Pound Euro (GBP/EUR) Exchange Rate Falls despite Bundesbank Warning

The Pound Euro (GBP/EUR) exchange rate slumped at the start of the week despite fears that Covid-19 could be a long-term issue for the Eurozone. Germany’s central bank, Bundesbank said that the virus is a significant risk to the bloc’s largest economy.

The single currency managed to edge up against GBP despite falling near a three-year low after Friday’s data showed the German economy stagnated in Q4 2019. Added to this, there were reports suggesting the European Central Bank (ECB) may consider a rate cut.

Meanwhile, traders are going to be looking to tomorrow’s German business sentiment indicator for further evidence of a weak economy. If sentiment slides further than expected, the single currency will slump.

Pound US Dollar (GBP/USD) Exchange Rate Slumps as Traders Flock to Safe-Haven USD

The Pound (GBP) slipped against the US Dollar (USD) as traders flocked to the safe-haven Dollar. However, markets remained quiet as US markets were closed for the Presidents’ Day holiday.

The US currency remained a safe bet for traders as the country’s growth was largely stronger against a backdrop of weaker global economic growth.

Markets continued to remain cautious as the Covid-19 death toll continued to rise, and many see the outbreak and spread of the virus as a long term issue for currency markets.

Meanwhile, the Dollar could gain further support following the release of the US NAHB Housing Market Index. If the index edges higher than expected, back up to the 20-year high hit in December, the ‘Greenback’ will rally.

Steady Oil Prices Cause the Pound Canadian Dollar (GBP/CAD) Exchange Rate to Fall

The Canadian Dollar (CAD) rose against the Pound (GBP) on Monday after oil prices saw little change. Concerns over falling fuel demand due to the spread of Covid-19 were offset by market expectations of production cuts, which will tighten supply.

Commenting on this, OANDA’s senior market analyst, Jeffrey Halley said:

‘Oil remains acutely vulnerable to both excess supply and the economic coronavirus-induced slowdown in China and other parts of Asia.’

Looking ahead, the ‘Loonie’ will edge up further against the Pound if oil prices edge higher as major oil producers announce production cuts.

Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as Spread of Covid-19 Appears to Slow

The Pound (GBP) slumped against the Australian Dollar (AUD) as risk appetite increased. Reports revealed that the number of new infection cases in China was the lowest since 23 January, suggesting the spread of the virus was beginning to slow.

Looking ahead, the ‘Aussie’ could reverse today’s gains following the release of the Reserve Bank of Australia’s (RBA) meeting minutes. If the minutes reveal the bank is overly dovish about the outlook for the Australian economy, AUD will slide.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls After Surprise Jump in NZ PSI

The Pound New Zealand Dollar (GBP/NZD) exchange rate fell on Monday after a surprise jump New Zealand services activity. The PSI rose to a better-than-expected 57.1, and the highest level since March 2018, providing the ‘Kiwi’ with a boost.

However, traders remain cautious about the spread of coronavirus and Mike Shirley, a dealer at Kiwibank noted:

‘It was pretty upbeat but it was for January and I don't know how much of the coronavirus story was captured by that [PSI data].’

Looking to Tuesday, NZD could fall following the NZ Global Dairy Trade Price Index. If the price of dairy slumps further than expected after last week’s disappointing figure, the GBP/NZD exchange rate will edge higher.

As of Monday, 17th February 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2003, GBP USD exchange rate was 1.3007, GBP AUD exchange rate was 1.9385, GBP NZD exchange rate was 2.0211, GBP CAD exchange rate was 1.7217, and GBP CNY exchange rate was 9.0794.
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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