As expected, the Bank of England left interest rates unchanged at 0.1% whilst keeping the value of their quantitative easing program at £745bn. The central bank also suggested that the UK is facing a less severe downturn than had been anticipated, although the road to recovery is a slow one especially for the labour market. It now expects the UK economy to contract by 9.5% in 2020 compared to its initial forecasts of 14%. This has given the Pound a slight boost this morning against both the Euro and the Dollar. The UK’s daily coronavirus count continues to remain high with 892 new cases announced.
Eurozone final services PMI and retail sales data saw worse than expected releases which caused some short-term weakness in the Euro yesterday morning although this was quickly forgotten by the market. This morning, German factory orders were released at 27.9% compared to 10.3% that was forecasted. Figures released yesterday showed that the number of new coronavirus cases in France reached 1,695 which is the highest number seen in over two months. Nonetheless, the Euro remains unchanged and is still showing strength against the Dollar.
Although US final services PMI and ISM non-manufacturing PMI figures both came out better than expected, the Dollar has struggled to make up any of its recent losses. ADP non-farm employment change was released at 167K compared to the forecasted figure of 1200K which disappointed the market. US unemployment claims are due at 1:30pm which may cause some short-term volatility. Lawmakers are still negotiating the next coronavirus rescue package with a compromise still yet to be found. This is keeping the Dollar on the back-foot against both the Pound and Euro for the time being.