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ECB and Fed in Focus This Week

Pound News: Will PM Johnson Avoid a Second Wave of Coronavirus?

The Pound was able to make gains against a handful of currencies on Monday after markets were provided with a boost of risk appetite on hopes the UK will begin to ease lockdown measures as the number of new coronavirus cases appears to slow.

Added to this, GBP sentiment improved after Prime Minister Boris Johnson returned to work, a month after he tested positive for Covid-19.

Looking ahead, the focus will now be on whether or not Johnson will find a way to ease lockdown measures without triggering a second wave of coronavirus.

Michael Hewson, chief market analyst at CMC Markets UK noted:

‘Attention will be on him, and in particular the government more broadly, to announce some sort of pathway out of lockdown, as it becomes increasingly apparent how much economic damage is being done to the UK economy.’

Pound Euro News: ECB Meeting in Focus

The Pound was able to make gains against the Euro at the start of the week as traders await this month’s European Central Bank (ECB) meeting.

The single currency slumped as the Eurozone’s central bank is likely to extend its debt purchases to include junk bonds. Sentiment was left dampened as this decision could increase tensions and widen the rift between EU member states.

Commenting on this, Piet Haines Christiansen, chief strategist, ECB and fixed income, at Danske Bank said: ‘That’s really a huge step, because the ECB has never wanted to accept junk at all.’

It is likely the Euro will continue to slide against the Pound if risk appetite amongst investors increases and traders continue to fret about the divisions between the European Union.

Pound US Dollar News: Federal Reserve Meeting in Focus

The US Dollar slumped against the Pound on Monday as demand for the safe-haven currency fell as risk appetite improved as lockdowns in several countries around the world were eased.

According to MUFG’s currency analyst, Lee Hardman:

‘The US Dollar has started the week on the back foot […] It reflects more risk-on trading conditions at the start of this week. Most notably, there was a sharp drop yesterday in the reported number of COVID-19 fatalities in a number of countries […] which provides further encouragement that lockdown measures are proving effective.’

Looking ahead, traders will be focused on Wednesday’s US Federal Reserve monetary policy meeting. While policymakers unlikely to ease interest rates, if they are more optimistic than expected it will boost risk appetite and send the Dollar lower.

Pound Canadian Dollar News: Oil Prices Continue to Tumble

The Canadian Dollar edged lower against Sterling today as oil prices continued to slide on Monday over concerns over lower demand due to coronavirus and scarce storage capacity for the commodity.

Oil futures suffered a third straight week of declines last week, dampening sentiment in the oil-sensitive ‘Loonie’.

Looking ahead, the Canadian Dollar is likely to suffer further losses if oil prices continue to fall, weighed down by weak oil futures and concerns about global demand.

Pound Australian Dollar News: Australia Eases Lockdown Measures

The Australian Dollar edged higher against the Pound on Monday as the boost in risk appetite pushed traders back towards the risk-sensitive ‘Aussie’. AUD also made Games today as millions of Australians download an app to help trace close Contacts of coronavirus patients.

Added to this, who lockdown restrictions were eased in Western Australia today which provided risk appetite with a further boost.

Looking ahead, further increases in risk appetite will continue to buoy the ‘Aussie’ and send it higher against the Pound.

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