- GBP/USD Dips on Poor UK Data Release
- Euro Also Struggling Against Retreat to USD
- Markets Hoping for Positive Opening After Torrid Days
After a solid rebound, the GBP/USD and other majors in the forex market dipped back slightly today. This comes as US markets also retract with some fearing a second wave of coronavirus, but the general sentiment being that there was too much optimism too soon from a market point of view. Worse than expected GDP figures from the UK today have also contributed to a move slightly away from the pound.
Huge GDP Drop Does Nothing to Help Sterling
Forex trading in the GBP/USD market has slipped back today with the pair hovering around the low 1.26 mark but looking downward. A certain part of this momentum change will be a result of the strong move back to the safety if the US Dollar in recent days as markets feel the pinch from a pullback on recent gains.
Another major factor weighing on the Pound is the release of UK GDP figures for April. These came in with a huge drop of 20.4%, slightly worse than anticipated. This leaves the market looking in a downward direction as traders are also concerned about the outcome of Brexit talks which are still ongoing with no deal yet in sight. Failure to get beyond this impasse would leave Boris Johnson and the UK in the difficult position of falling back on WTO terms that are not all that favorable.
Euro Also Hits Stumbling Block
The EUR/USD market has also noted a dip in forex trading. This has been less so than other markets however. It still trades at around the 1.13 point at the time of writing. While there has been a strong movement back to the safety of the US Dollar, the Euro has held steadier than the GBP.
This may be due to the fact that, even though coronavirus case numbers in the US have begun to increase, those in Europe have continued to drop steadily. More will be expected today as finance chiefs in Europe meet. This could bring about news on support measures and how the picture is looking economically within the bloc, at least in the short-term by providing more details on how the €500 billion fund will be dispersed by the European Commission.
Markets Aiming to Bounce Back After Sharp Declines
After some huge gains last week, traders in the US were brought back down to earth with a bang in recent days. Markets fell sharply yesterday with the Dow Jones alone down almost 6%. With that, there appears to be renewed hope that trading today will reverse the tide of negativity that has overtaken the week.
Pre-market trading on Friday has indicated that most stocks on the market will see an improvement on previous days with the Dow Jones futures trading up more than 300 points at the time of writing. Many analysts still warn though that the road to recovery is longer than the markets have shown.