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RationalFX : Safe haven currencies fall

RationalFX : The pound rebounded against the US Dollar and Euro on Tuesday to move away from 7 week lows. Positive signs from a coronavirus antibody trial saw safe haven currencies such as the dollar fall as markets rallied …

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RationalFX


GBP

Sterling did not rally as much as it still remains held down by Brexit-related risks and speculation over negative interest rates.

The market has started to price in the possibility of a negative interest rates after a Bank of England rate setter Silvana Tenreyro said on Monday that the central bank has not ruled out a negative rate cut. This added to speculation after the bank’s chief economist, Andy Haldane, said negative rates were being looked at more urgently. A negative rate cut is being looked at but analyst are predicting the central bank will add to its quantitative easing program to stimulate growth.

Furthermore the pound is also being weighed down by the lack of talks in regards to a trade deal between the UK and EU. Britain are expected to set out plans for a post Brexit tariff sometime this week.

EUR

The Euro continued to strengthen on Tuesday after the Franco-Germany proposal was unveiled this week. This is a proposed fund by the European Union that will help eurozone economies that have been hit hardest by the coronavirus pandemic. The Euro was also boosted by the Dollar weakening which lost its safe haven appeal after encouraging results from the trial of a vaccine for COVID-19 boosted riskier assets.

Germany and France, whose agreements usually pave the way for broader EU deals, proposed that the European Commission borrow the 500 billion euros ($550 billion) on behalf of the whole EU. The Commission is expected to outline their proposal before a European summit scheduled for May 27. The Euro was also boosted by easing of restrictions in Eurozone economies too.

Key Announcements 

07:00 – GBP – CPI Y/Y- Expected to fall to 1% from previous 1.5%

14:00 – BOE Governor Bailey Speech

09:00 – EUR – ZEW economic sentiment (May) Germany

19:00 – USD – FOMC Minutes

Source : ETFWorld.co.uk

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