- GBPUSD lower on Fed minutes
- Euro tumbles below $1.08
- US economic data continues
GBPUSD has moved below the 1.29 level on Fed minutes and a general “risk-off” has seen the pair decline over 1% this week. Markets will eye the start of the UK EU trade talks as a indication for the pounds movement, however earlier in the week, GBP/EUR touched on a high of 1.2069 – the best level for the pair since the aftermath of the 2016 Brexit vote.
The euro’s tumble below $1.08 for the first time in three years may be only the first milestone in its downward journey with multiple factors seemingly all against the single currency. Economic data, news, and the option market currently share the same opinon that there is trouble ahead for the euro. Sluggish growth aside, the euro is dogged by the economic impact of the coronavirus outbreak, the risk of U.S. trade tariffs, and finally, its low volatility – which makes it an ideal candidate for “shorting” against higher-yielding currencies.
- The USD strengthened once more after strong US data and the Federal Reserve minutes showing optimism on the economy. Policy makers suggested a hold on interest rate hikes despite risks caused by the coronavirus outbreak.
- US homebuilding fell less that expected as well and permits surged to a 13 year high backing up other positive recent economic data out of the States.