US dollar skyrockets in cautious trade

  • US dollar skyrockets in cautious trade

     

    A risk-off mood has been the prevalent trend in the currency market over the past couple of weeks, resulting in investors favouring safe-haven currencies. 

    During this time, we’ve seen GBP/EUR slump from €1.17 to €1.16, whilst EUR/GBP climbed to £0.85.

    Meanwhile, GBP/USD plummeted from $1.38 to $1.36, while EUR/USD has fluctuated between $1.17 and $1.16.

     

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

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    What’s been happening?

    The pound tumbled to a one-month low in mid-August, undermined by some disappointing UK data releases and concerns over a rise in domestic coronavirus cases.

    In contrast, the US dollar, has rocketed higher against the majority of its peers as a souring market mood -partly attributed to Federal Reserve tapering speculation- has seen investors flock to the safe-haven ‘greenback’.

    This surge in USD exchange rates, has limited the upside potential of the euro over the past couple of weeks, in spite of some positive Eurozone data releases.

    What do you need to look out for? 

    Looking ahead, should the gloomy market mood remain firmly entrenched amidst the resurgence in global coronavirus cases, then the US dollar may extend its upward trajectory into September.

    This could see the euro continue to struggle to find any meaningful gains due to the strong negative correlation between the single currency and the US dollar.

    Meanwhile, the pound may remain on the defensive, as a run of underwhelming UK data looks to have cast doubt over the Bank of England’s (BoE) plans to wind down its stimulus programme.

     

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