The main talking point yesterday was the breaking of 1.30 on GBPUSD, a level which has historically seen a lot of volatility and pressure from options and orders. After seeing mid-market prices hit 1.3013, GBPUSD promptly whipsawed back to 1.2950 before making a run back to 1.3005. Price has been ground lower and at the time of writing this update is back below 1.30 – the all important “close” above 1.30 will be carefully watched, but with so much speculation taking place across the market regarding the condition of the Dollar, it still feels very one directional. Goldman Sach’s produced an article on the Dollar losing its role as the reserve currency, which certainly added more pressure to the greenback.
Gold and silver are still struggling with their bullish direction, which as mentioned before could provide a short-term source Dollar funding strength. Overlooking that is US Q2 GDP data, due to be released today at 12:30. The expectation is to see a sharp drop from -5% in Q1 to -34.1%. A fair reflection of the impact coronavirus has had over that period of time. With GBPUSD on a 1.30 tightrope, this is a major risk event for the pair and could act as a major catalyst.
No updates of any merit for GBPEUR. Price is still hovering around 1.10 with both Sterling and the Euro at an impasse, strangely mirrored by the current Brexit progress. The pair has moved slightly higher this morning following German GDP for Q2 vs Q1 coming in at -10.1% versus -9% expected, in addition to the year-on-year figure which has seen the economy contract by -11.7%.
Plenty of volatility to be considering as we head into the last day of the week.
Have a great day.
Author: Alistair Hutson, Senior Relationship Manager
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