Pound Unwinds, Euro Looks Past the Key Macro Data
LONDON, U.K. – After a rough trading session for the British pound on Thursday, which showed the currency dropping back through the 1.32 level and losing around 100 pips against the US dollar, it took a slight bid overnight.
Despite the losses in the GBP/USD pair, the overall sentiment in the market is optimistic towards a friendlier Brexit, as recent headlines suggest that both sides desire a fast and appropriate deal to help limit any damage to both parties.
Meanwhile, the bad PMI reports in the UK continue to suggest the economy in the country is barely growing, and a possible rate hike is not possible in the near future.
Prime Minister Boris Johnson is also keeping his stern optimism going. But despite that, the pound exchange rates remain sensitive at the end of this week.
Like the downward trend of the British pound, the euro also dropped on Thursday, going down to as low as 1.12 against the US dollar. The drop in the currency exchange rate came despite the better than expected PMI data for the manufacturing sector in Germany and Eurozone. Despite outperforming the pound, the euro wasn’t able to find a massive buying appetite from market players during a strong trading day for European equities.
Elsewhere, the US stocks continued to surge, and the US dollar was in on the upward trend. The currency rallied powerfully on Thursday following a weak few days ahead of the new year.
Although some weakness surged overnight, it was dimmed by a set of massive job numbers and a weak manufacturing report, which showed that the economy of the country has stayed on the same course, and the Feds firmly holds its statement that the dollar is very steady.
In a recent report, Kathy Lien at the BK Asset Management said that the Us dollar usually shows great performance in election years, noting that the US election is scheduled for November, which might put a risk to the recent rally of the euro in 2020.
She stated that in the last four decades, the greenback has only recorded declines in two election years. And during the outperformance of the US dollar, in association, the euro fell nine times in the last 11 election years, which means the greenback will have a good future in 2020, she said.
Meanwhile, the risk sentiment in the global market was knocked overnight after reports surfaced that the US airstrikes in Baghdad may have caused the death of an elite Iranian General. Japanese yen rose as the market awaits for any response from Iran, while the Australian dollar slipped 0.21% as the US stock futures fell.
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