The pound was stable on Friday during an uneventful day, but did make some gains versus a weaker US dollar in afternoon trading of around 0.5%. In early trading today, those gains have been pared.
The UK government has reiterated its position that they are not considering relaxing lockdown restrictions at the current time, as deaths from the virus exceed 16,000. With economic activity frozen and the full impact of the crisis yet to be seen, the currency is reacting only to risk appetite against the dollar and has been largely unmoved versus the euro in recent days.
With a very light economic calendar today, there is likely to be no acute change in position, though markets will be listening closely to Bank of England statements regarding the scale of the inevitable recession.
GBPUSD opened at 1.2441 and gained in afternoon trading, closing at 1.2506
GBPEUR opened at 1.1489 and showed little deviation throughout the day, closing at 1.1497
The US dollar ticked lower on Friday, as investors saw some optimism in the results of a new drug trial and remained hopeful that President Trump would be looking to relax restrictions as soon as possible. This caused a slight shift back to riskier assets and away from the dollar, though that sentiment has reversed once again in early trading today.
It seems apparent that there will remain a degree of safe haven support and a level of demand for the dollar during the pandemic, which transcends general risk-on or risk-off appetite.
The euro has lost around 1.46% against the dollar already this month, facing its biggest monthly fall since July last year. It also hit its lowest against the Swiss franc in almost five years last week. With French President Macron warning that the European Union could collapse unless it finds some way to share the escalating costs of the crisis, the current situation would appear to have exposed the vulnerability of the single currency. Composite euro zone PMIs, comprising services and manufacturing, nose-dived last month to a record low of 29.7 versus February’s 51.6. This represents the biggest monthly drop since the survey began in 1998.
In other news, the New Zealand dollar is the only currency to hold its own against the US dollar in early trading, as the government states it will lower its alert level one notch today. The country has bucked the global trend in recording just 12 deaths from Covid-19.
EURUSD opened at 1.0829 and closed at 1.0878
