Foreign Exchange Update 3rd August 2020
A fortnightly look at global financial markets by deVere Groups, Senior Investment Strategist Tom Elliott.
The GBP/USD exchange rate is consolidating last week’s sharp gains around 1.3070. The pair was pushed back due to fears of another UK lockdown and uncertainty about US-UK trade talks.
The rising cases of coronavirus in the UK is holding the Sterling from gains, amid warnings from the government that another lockdown may be imposed if there is a continuing spike in the number of cases.
The latest Bank of England policy announcement, set to be released on Thursday, will heavily impact the GBP/USD exchange rate. Governor Andrew Bailey is expected to suggest at further dovish policy measures, despite leaving policy unchanged.
On the other hand, the reached a fresh two-year low at the end of last week. Reports hint that U.S. unemployment rate is moving lower, dropping from 11.1% to 10.3%.
The EUR/USD was not affected by the upbeat eurozone PMIs, as it trades close to 1.1750. Investors are now awaiting the publication of the U.S. ISM Manufacturing PMI. There are claims that the Eurozone’s coronavirus cases are under control, unlike those in America, giving the Euro the upper hand.
Furthermore, the New Zealand Dollar looks to be gaining against its U.S. counterpart, as NZD traders await the upcoming employment and inflation data. The Reserve Bank of New Zealand is also to announce its interest decision next week.