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Sterling Rises as BoE Hold Off on Further Stimulus

Pound News: UK Set to Face Largest Slump in Over 300 Years

Sterling rose this morning against a handful of currencies after the Bank of England (BoE) left interest rates unchanged and held off on further stimulus. Although, the bank said it was ready to take further action to help the economy which is set to face its largest slump in over 300 years.

Meanwhile, GBP slumped against a handful of currencies on Wednesday as construction suffered the steepest decline record in April, with the fall over twice as large compared to March.

According to CC Markets’ chief market strategist:

‘The data was poor – an awful lot worse than an awful lot of people had predicted which reinforces the fact that it’s very difficult to predict the levels of PMIs going forward. Which in turn makes it much more difficult to predict the extent of any rebound going forward, because if you can’t predict the downside risk it’s going to be even more difficult to predict the bounce back.’

Looking ahead, the Pound could remain under pressure if Prime Minister Boris Johnson announces the coronavirus lockdown will be extended once again.

Pound Euro News: Markets Focus on ECB’s Bond Buying Programme

The Pound slumped against the Euro on Wednesday afternoon despite the single currency being left under pressure due to worries about the European Central Bank’s (ECB) bond-buying programme.

Germany’s highest court gave the ECB three months to justify purchases under its programme, and if they could not do this, they would lose the Bundesbank’s participation.

However, the ECB is expected to be able to justify its purchases, meaning the decision from Germany’s top court is not likely to derail the bloc’s stimulus programme.

Looking ahead, the court’s decision could continue to weigh on the single currency during today’s session.

Pound US Dollar News: Private Employers Lay Off Record Number of Workers

The US Dollar was able to make gains against the Pound on Wednesday, with the pairing falling by around -0.7%. Data showed private employers in the United States laid off a record 20.236 million workers in April due to mandatory business closures.

Commenting on this, MUFG’s chief economist, Chris Rupkey noted:

‘One thing for sure is that this pandemic health crisis has produced depression-magnitude job losses which means this recovery is going to take longer than many are thinking. The Great Depression lasted three and a half years, and it will be a miracle if the economy gets anywhere near back to normal within the next couple of years.’

Looking ahead, the release of US jobless claims could cause risk appetite to improve at the end of the week. If data shows the number of Americans applying for unemployment has fallen once again, showing claims are stabilising, traders could move away from the safe-haven USD.

Pound Canadian Dollar News: Oil Prices Slump to $30 a Barrel

The Pound Canadian Dollar exchange rate remained largely flat after oil prices fell to around $30 a barrel on Wednesday.

Prices slumped after a report showed a higher-than-forecast rise in US inventories, which largely offset earlier hopes for a recovery in oil demand.

Meanwhile, the ‘Loonie’ could suffer losses this afternoon following the release of April’s Ivey PMI. If the seasonally adjusted PMI plummets further than expected due to coronavirus lockdowns, it will weigh on the Canadian Dollar.

Pound Australian Dollar News: Aussie Retail Sales Jumps to Record High

The Australian Dollar managed to make gains against the Pound as the ‘Aussie’ received a boost after panic buying buoyed retail sales.

March’s sales jumped to a record high, with food sales increasing by 24% and the sale of toilet rolls soaring 115%. However, it is likely this boost will be short-lived as April’s sales are likely to plunge due to Australia’s strict social distancing rule and business closures.

Looking ahead to Friday, the ‘Aussie’ could slide following the release of the Reserve Bank of Australia’s (RBA) monetary policy minutes. If the minutes reveal policymakers are overly dovish about the country’s economic recovery, AUD will suffer losses.

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