Yesterday, Chancellor Sunak announced a further fiscal stimulus package worth £350bn including £330bn worth of loans to help businesses. He called the situation an ‘economic emergency’ and promised to provide further fiscal help if need be.
This initially gave some much needed support to the Pound, which had weakened throughout the day. However, Prime Minister Johnson has reiterated that the Brexit transition period will stay the same and end on 31st December 2020. This put Sterling under pressure overnight and into the morning. Although UK average earnings increased to 3.1%, the unemployment rate also went up to 3.9%. Overall, the market largely ignored the mixed bag of employment results.
Both Eurozone and German ZEW economic sentiment figures fell to -49.5, which put the Euro on the back foot against the Dollar throughout the day yesterday. Eurozone consumer price index inflation data is due at 10am, which will be closely watched by the market. ECB member Holzmann has said that they have not reached their limits in terms of monetary intervention, whilst fellow member de Guindos stated that the economic impact of the coronavirus will last for some time.
US Treasury Secretary Mnuchin has said that he supports the idea of providing $250bn worth of cheques to families across the US in order to help them during the coronavirus pandemic. This will need to be approved by Congress in order to take effect. Although US retail sales disappointingly fell to -0.5%, the market largely ignored this and the greenback continued to surge against the Pound and Euro as the same data from the previous month was revised upwards.