GBP/EUR: Euro Rallies vs Pound On Policy Tightening Optimism
  • Euro (EUR) gains capped as risk sentiment remained weak on rising covid cases
  • ECB Christine Lagarde to speak later today
  • US Dollar (USD) slips following mixed data on Thursday, US consumer confidence up next
  • Euro US Dollar exchange rate (EUR/USD) is on track for a weekly gain of 0.3%

The Euro is edging lower for a third straight day versus the US Dollar, although remains supported by US$1.12. The Euro US Dollar exchange rate settled -0.3% at US$1.1218 on Thursday.

At 07:15 UTC, EUR/USD trades -0.1% at US$1.1211, amid rising US coronavirus cases and as investors look ahead to a speech by European Central Bank Governor Christine Lagarde.

Rising coronavirus cases have kept a lid on risk sentiment across the week. A county in Germany’s most populous state was placed back into lockdown this week after a coronavirus outbreak at a slaughterhouse. More than 1500 people from the Toennies plant in Guetersloh tested positive.

However, the principal concern for the markets is the growing number of cases in the US. The US saw a fresh record high of nearly 42,000 new daily coronavirus cases on Thursday. Texas Governor, Greg Abbott announced that reopening plans will be paused as the number of infections spiral out of control. Fears that the fragile economic recovery will be knocked is keeping risk sentiment in check.

Euro investors will look ahead to a speech by ECB Governor Christine Lagarde. Investors will be watching closely to see if she discusses the current economic situation and the dealings with the German constitutional court. ECB minutes released yesterday showed that the central bank remains very accommodative and willing to act again if deemed necessary.

The safe haven US Dollar is edging lower despite rising covid concerns. Data is the previous session was mixed. US durable goods orders soared +15.5% boosting economic recovery optimism. However, jobless claims revealed that the labour market is improving at a slower rate.

Looking ahead investors will focus on US personal consumption expenditure and consumer confidence data for further clues over the progress of the US economic recovery. Analysts are expecting to see a moderate improvement in the figures.


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