The pound firmed towards a one-week high yesterday and has maintained those gains in early trading. This is despite data this morning showing that Britain’s economy stagnated in the three months to February before the coronavirus crisis escalated. In addition, news that the Bank of England has agreed temporarily to finance government borrowing if funds cannot immediately be raised from debt markets had no immediate impact on sterling. However, many investors remain bearish, with indications that some eurozone countries may be preparing for an easing of lockdown restrictions, whilst the UK is reportedly looking for an extension.
News that Boris Johnson is improving in hospital may also have bolstered the pound.
There is no significant economic data today heading into the Easter break.
GBPUSD opened at 1.2306 and gained a cent, closing at 1.2404
GBPEUR opened at 1.1337 and also gained nearly a cent, closing at 1.1420
The US dollar index is down 0.6% so far this week as safe-haven flows to the currency eased on rising hopes much of Europe and the United States could soon see themselves out of the worst period of the pandemic. The focus today will be on the US jobless claims report, due at lunchtime. An increase in claimants will possibly offer little surprise, but any drop could be seen as further indications that the crisis is dissipating and leave the dollar vulnerable to further losses.
There is little to report with regards to the euro, which appears to only be moving in response to external forces. Investors have been less than impressed with the lack of direct central policy action in response to the pandemic, although that is tempered by signs that the worst of the crisis may be over in some parts of the zone.
EURUSD opened at 1.0859 and closed at 1.0892
In other news, commodities-backed currencies have enjoyed a boost, with the news that the pandemic may be peaking and that major oil producers may agree to cut output to stem a plunge in oil prices. The Australian dollar, in particular, rose to its highest level since mid-March.