Irish Deputy PM Coveney has said that UK-EU trade negotiations ‘has not been good’ and that there is a lot to do in a small amount of time. This initially led to the Pound losing ground against both the Euro and Dollar. At 7am this morning, the Bank of England suggested that the UK economy may experience its worst recession on record due to the coronavirus pandemic, estimating that the economy could contract by 14% this year. However, two members of the Monetary Policy Committee voted to increase quantitative easing by between £100-300bbn and unanimously decided to keep interest rates on hold at 0.10%.

The fact that some MPC members are ready to provide further monetary stimulus gave the Pound a big boost, recovering most of its losses experienced in the last 24 hours. Bank of England Governor Bailey is due to speak at 10am, and the market will pay close attention for any indication of when this further stimulus could take place.

Forecasts from the European Commission showed that they expect the Eurozone to also fall into a deep and uneven recession, with Italy and Spain predicted to show declines of over 9% and with Greece’s economy shrinking by 9.7%. This has kept the Euro from making any significant gains against the Dollar. In addition, German factory orders for the month of March fell by 15.6%, which didn’t help the Euro’s cause. ECB President Lagarde will be delivering a speech at 3pm which could provide some volatility.

With US Secretary of State Pompeo renewing his verbal attack on China and President Trump indicating that they will keep a close eye on whether or not China are fulfilling their obligations as part of the Phase 1 trade agreement, the Dollar has benefitted in the current risk-off climate. US ADP non-farm employment change showed a loss of over 20 million jobs being lost in the private sector. With unemployment claims due this afternoon and non-farm payrolls being released tomorrow, the Dollar is likely to continue to experience extreme volatility.