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Sterling falls to 5-month lows

Sterling falls to 5-month lows

GBP

The Pound continues to struggle for direction against the Dollar following its fall to the lowest level in five months at the 1.2255 figure. With the jump in COVID-19 cases being the key catalyst behind the pair’s drop, traders await expected stimulus measures to counter the pandemic as well as the UK employment data for fresh impulse.

February’s UK employment data will be the key to follow whilst Jan ILO Unemployment rate is expected to hold steady at 3.8% and the labor market has remained strong in the UK despite growing uncertainties. This reading however, predates the spread of COVID-19 in Europe. COVID-19 disruption in the latter part of the month should be offset by earlier precautionary spending. Sterling currently stands at 1.2177 against the Dollar and 1.0966 and the Euro. 

 

 

USD

The Dollar is looking to regain some traction following the negative start of the week, as investors remain cautious and major central banks continue to pump in more stimulus into the system in order to fight the impact of the coronavirus on the global economy.

The DowJones had its worst session since 1987 on Monday despite the Federal Reserve (FED) reducing the Fed Funds Target Range (FFTR) by 100 bps to 0.0%-0.25% on Sunday. The Fed’s move on rates adds to last week’s first in-between rate cut by 50 bps and the subsequent injection of trillions of dollars to the system.

In the meantime, developments around the coronavirus are expected to keep driving the sentiment in the global markets for the time being against the backdrop of unremitting efforts from countries to curtail the contagion.

Later in the US docket we see February’s advanced Retail Sales are due seconded by Industrial Production figures for the month of January, Capacity Utilization, the NAHB index, JOLTs Job Openings and Business Inventories.

 

 

EUR

The Euro is currently dipping against the Dollar and is now facing the 1.1130 region in response to a pick-up in the demand for its US counterpart. The common currency had resumed its downside tilt this morning and is partially reversing the optimism seen at the beginning of the week and keeping business above the 1.11 key figure. 

COVID-19 still remains the centrepiece and the backdrop of further containment attempts by countries and extraordinary monetary policy measures by central banks in order to deal with the impact on the economy from the virus.

Data wise for the Euro, the ZEW Economic Sentiment Survey in Germany and the broader Eurozone should shed further light on how the economy fared in March. As of writing the Euro currently trades at the 1.1110 against the Dollar. 

 

 

Data to watch

09:30 – GBP – Average Earnings index 

10:00 – EUR – German ZEW Economic Sentiment 

All Day – EUR – EU Economic summit

12:30 – USD – Core Retail Sales 

12:30 – USD – Retail Sales 

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