US dollar nosedives boosting the pound

Coronavirus uncertainty rocks currency markets in AprilStaying 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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The past couple of weeks have been marked by a heavy sell-off of the US dollar, which has allowed the pound to surge.

During this time, we’ve seen GBP/EUR climb from €1.09 to €1.10 and EUR/GBP slide to £0.90.

Meanwhile, GBP/USD has surged from $1.28 to $1.30, whilst EUR/USD has strengthened from $1.17 to $1.18.

What’s been happening?

The US dollar ended July similarly to how it began, beating a hasty retreat amidst growing concern over surging US coronavirus cases and a sharp drop in GDP.

This downtrend resulted in the US dollar index plummeting to a 26-month low, before renewed US-China tensions helped the ‘Greenback’ to claw back some of its losses through the first week of August.

This USD sell-off proved beneficial to the pound through the end of July, although Sterling sentiment has since begun to sour amidst worries over UK unemployment and the potential for a second lockdown.

The euro, meanwhile, has found its recent rally tempered over the past couple of weeks in light of some gloomy second quarter GDP figures.

What do you need to look out for?

Looking ahead, the pound looks likely to relinquish more gains through August as UK GDP figures are set to report a startling 20% plunge in growth in the second quarter.

Meanwhile, EUR investors will be keeping a close eye on the recent coronavirus resurgence in Europe, with the euro potentially losing some ground if new coronavirus cases escalate out of control.

Finally, the US dollar may trade in a wide range over the coming weeks as US-China tensions and talks over the next round of US fiscal stimulus are likely to infuse USD exchange rates with volatility.

At Currencies Direct we’re here to talk currency whenever you need us, so please get in touch if you want to know more about the latest news or how it could impact your currency transfers. Since 1996 we have helped more than 325,000 customers with their currency transfers, so why not give us a call on 00351 289395739 to find out more or alternatively visit the website on www.currenciesdirect.com/portugal and register to get regular updates on the currency markets.

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