Pound Sterling, Euro Take Center Stage this Week
Optimism between the Eurozone and the United Kingdom wasn’t enough to lift the GBP above the USD this week. After the pair’s three-week high thanks to risk appeal, analysts expect GBP/USD to lower after its central bank confirmed negativity.
Bank of England’s chief economist Andy Haldane warned that its economy will take a hit at least three more times. There’s only a matter of how large the impact would get. This brings doubt into the FX market just days after he described the UK’s economy would take a V shape.
GBP/USD hit 1.255 as of now, which is 0.3% above yesterday’s forex trading. Despite the looming negativity for the pound, USD was the weakest and GBP was the second strongest in today’s session.
GBP/USD saw the largest range at 59 pips on the daily.
This was after PM Boris Johnson warned Germany’s Angela Merkel that the UK feels prepared to leave the EU, with a no-deal. The European Union and the UK are currently under talks about their commitments with certain rights.
If the UK does leave the Union, the City would leave certain rights out in the open. This includes fishing territory rights, the EU’s influence on UK laws, and the UK’s involvement in the bloc’s overall market. Moreover, if Boris pushes through with this plan, it would harm both the single and the sterling currencies.
European Stocks Fell, but the Euro was Successful
The single currency was the strongest currency today as the EUR/USD pair strengthened with the equity targets this week.
Spot gold is expected to rise in the greenback’s place as it continues to move higher to the $1,800 level. This price was last met in 2011.
Meanwhile, investors are currently profiting much more over the United States’ stock market. Dow futures, S&P futures, and NASDAQ index futures are all pointing to a surge within the quarter.
Forex investors were also more optimism towards the euro despite disappointing news from the European Commission. The agency made a notable downward revision to their GDP growth targets today, which could impact much of the pair.
The EUR/USD pair has been somewhat stale since the beginning of the pandemic. This week alone, the pair has been treading long-time resistance and support range. Volatility is expected to remain as slow as it is now, into the near term.
Risk sentiment towards commodity pairs is also a defining factor for the pair, and that market doesn’t look good, either. These pairs have shown the weakest figures for the past three days.
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