The euro is back in focus
The pound skyrocketed on Monday, surging on the back of suggestions the UK economy is enjoying a V-shaped recovery.
Sterling continues to press higher this morning, with GBP/EUR climbing to €1.1087 and GBP/USD buoyed at $1.2697. GBP/CAD and GBP/AUD are rangebound at C$1.7135 and AU$1.8026, respectively, while GBP/NZD has jumped to NZ$1.9301.
Meanwhile, the euro is back in focus this morning after the EU finally reached a deal on its coronavirus recovery fund. The single currency looks positioned to rise after some initial profit taking.
What’s been happening?
The pound roared higher against its peers at the start of the week as the Bank of England’s (BoE) chief economist, Andy Haldane, insisted that the UK is undergoing a V-shaped recovery, in spite of conflicting views from others at the BoE.
This upside in Sterling also came despite concerns over souring tensions between the UK and China. The UK government announced the suspension of its extradition treaty with Hong Kong in response to Beijing’s controversial national security law.
The euro, meanwhile, was steady through Monday’s trading session amidst hopes EU leaders would be able to reach a compromise in regard to the coronavirus relief fund.
Finally, we saw the US dollar mostly rangebound yesterday as limited demand for the safe-haven currency, amidst positive headlines about a coronavirus vaccine, offset concerns over rising infections and geopolitical tensions.
What’s coming up?
Looking ahead, the news that leaders finally reached an agreement on the EU’s recovery fund is likely to prove supportive for EUR exchange rates in the long run, but is so far weighing on the euro this morning as it prompts some profit taking.
Coronavirus developments are also likely to remain a key catalyst of movement through today’s session. The US dollar is likely to remain on the back foot so long as vaccine optimism continues to buoy sentiment.
USD investors will also continue to pay close attention to the White House’s response to the country’s spiraling infection rate and what sort of stimulus plan the government may be planning to help the current scheme when it expires at the end of July.
For UK investors, the focus this morning looks to be on the UK’s latest borrowing figures as another massive rise in the national deficit last month is likely to raise concerns over the government’s public finances and potentially weigh on the pound.
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