IFX Market Report: Wednesday 15th April 2020

Sterling has risen to one-month highs versus the US dollar since the Easter break and is largely holding its momentum in early trading today, whilst remaining unmoved against the euro. This follows the recovery of Boris Johnson and a cautious improvement in risk sentiment, with hopes tentatively rising that an end to the Covid crisis may be in sight. Whilst too early to tell if the pound has now ridden out the storm for good, it was unmoved with the release of dire economic forecasts from the UK’s Office for Budget Responsibility and the International Monetary Fund, for economies that included the UK. Analysts are confident that the prospect of a recession is largely priced in already. Nevertheless, it should be noted that experts have warned that the UK may be on course to become the worst-affected country in Europe.

There is no significant economic data for sterling today.

GBPUSD opened at 1.2559 and closed at 1.2615

GBPEUR opened at 1.15 and closed at 1.1497

The US dollar suffered losses yesterday as investors cautiously returned to riskier currencies. This followed President Donald Trump appearing to lean towards easing restrictions put in place to contain the pandemic, with daily fatalities Stateside having fallen sharply. The greenback is also under pressure resulting from the weighty measures in place by the Federal Reserve to boost dollar supply. However, it is still too early for a complete retreat from safe-haven currencies and certainty will not return until the virus threat is completely eliminated.

The U.S. currency faces a further test at lunchtime today, with the release of retail sales and industrial production figures. These are likely to provide a clearer picture of the economic fallout from lockdowns.

The euro has remained largely reactionary during the crisis and was unmoved versus the pound yesterday. This has mostly been caused by indecision among euro zone governments on an emergency economic package, although a half a trillion euros compromise deal was reached on Friday. There has also been little in the way of significant economic data releases in the zone and today is no different.

EURUSD opened at 1.0921 and closed at 1.0968

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