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Pound Plummets Following BoE Stimulus Announcement, US Dollar Strengthens

The Pound fell sharply this week following the Bank of England’s (BoE) announcement that it would be expanding its quantitative easing programme by £100bn but slowing the pace of bond purchases.

The US Dollar, meanwhile, was catapulted higher by coronavirus jitters amid growing fears about a second wave of infections.


Pound Sterling Plunges on BoE Rate Decision

GBP/EUR – Down one cent on the week’s opening levels

GBP/USD – Down one cent on the week’s opening levels

The Pound nosedived this week, reeling in response to the BoE’s decision to increase its bond-buying programme but slow down the pace of purchases.

However it wasn’t all doom and gloom for Sterling, with GBP exchange rates able to strengthen at the start of the week on the back some Brexit optimism from Boris Johnson, who claimed a deal could even be done in July with a ‘bit of oomph’.

Looking ahead to next week, the focus will be on the UK’s latest PMI figures. An improvement in private sector activity in June may offer some support to GBP exchange rates.


Euro Struggles for Direction in Absence of Data

EUR/GBP – Up one pence on the week’s opening levels

EUR/USD – Unchanged on the week’s opening levels

Trade in the Euro has been a bit mixed over the past week, with a sparse data calendar leaving the single currency directionless for much of the session.

EUR investors were also reluctant to alter their positions in the currency ahead of the latest EU summit in which EU leaders discussed the terms of the EU’s €750bn coronavirus recovery fund.

Coming up next week, the Eurozone’s own PMI figures will be in the spotlight, with the Euro likely to receive a boost if the lifting of lockdown restrictions in in the Eurozone has helped economic activity in the bloc bounce back.


US Dollar Strengthens on Second Wave Fears

USD/GBP – Up one pence on the week’s opening levels

USD/EUR – Up one cent on the week’s opening levels

The US Dollar trended higher against most of its peers over the past week as rising concerns of a coronavirus resurgence saw investors favour the safe-haven currency.

Also supporting USD exchange rates was some positive US data, with solid retail sales figures and a surprise rebound in the Philadelphia manufacturing index bother being cheered by investors.

Turning to next week, we may see the US Dollar maintain its upward trajectory if coronavirus jitters weigh on markets. Data showing an expected rebound in US durable goods orders last month is also likely to prove supportive of the ‘Greenback’.


Australian Dollar Muted in Risk-Off Trade

AUD/GBP – Up one pence on the week’s opening levels

AUD/USD – Unchanged on the week’s opening levels

The Australian Dollar was mostly rangebound over the past week, with the currency’s attempts to rally quickly undermined by a souring of market sentiment.

On the data front AUD exchange rates also found limited support, as Australia’s jobs report revealed unemployment surged to a near two-decade high in May.

In the week ahead, we may see the Australian Dollar remain in a narrow range if fears over a second wave of coronavirus infections continues driving markets.


Key Data

Jun 22 GBP CBI Industrial Orders (Jun)

Jun 23 AUD Manufacturing PMI (Jun)

Jun 23 AUD Services PMI (Jun)

Jun 23 EUR Manufacturing PMI (Jun)

Jun 23 EUR Services PMI (Jun)

Jun 23 GBP Manufacturing PMI (Jun)

Jun 23 GBP Services PMI (Jun)

Jun 24 EUR German Business Sentiment (Jun)

Jun 25 GBP CBI Distributive Trades (Jun)

Jun 25 USD GDP (Q1)

Jun 25 USD Durable Goods Orders (May)

Jun 25 USD Initial Jobless Claims (20/Jun)

Jun 26 USD PCE Price Index (May)

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