Euro (EUR) Steadies as the ECB Holds its Interest Rates at 0%

Published: 16 Jul at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, France,

Pound (GBP)

The Pound (GBP) struggled today after UK unemployment remained high with over 640,000 people losing their jobs since the onset of the coronavirus pandemic.

As a result, investors have become increasingly concerned that Britain’s economic recovery could be much slower than previously expected.

Frances O’Grady, the general secretary of the TUC, was downbeat in his analysis, saying:

‘There’s a national disaster unfolding, with vacancies at an all-time low and more jobs lost every day. But ministers are watching from the sidelines, instead of saving jobs with targeted support for the hardest-hit sectors like retail, manufacturing and aviation.’

Euro (EUR)

The Euro (EUR) steadied against many of its peers today after the European Central Bank (ECB) held its interest rates at 0%. As a result, EUR investors have remained cautious as the Eurozone’s economy continues to struggle with the coronavirus pandemic.

Philip Lane, the ECB’s Chief Economist, argued that Europe now faces a ‘two step forward, one step back’ road to recovery.

US Dollar (USD)

The US Dollar (USD) has continued to suffer from a sell-off of safe-haven currencies this week after the US biotech company, Moderna, announced that several human trials had proven effective in Covid-19 vaccine trials.

Meanwhile, better-than-expected US industrial data for June boosted confidence in the world’s largest economy’s recovery, leaving the ‘Greenback’ weakened on improved risk-appetite.

China’s economy has also improved, with the nation being one of the first to return to growth following the initial peak of the coronavirus pandemic. Consequently, investors have fled to riskier assets as the world’s second-largest economy improves.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) continued to rise after the Bank of Canada (BoC) forewent adding to quantitative easing, which left many investors confident in Canada’s economic recovery in the months ahead.

The BoC said that Canada’s economic activity would not return to pre-pandemic levels until 2022. The bank also promised to keep interest rates at 0.25% until the economic slack is absorbed.

Australian Dollar (AUD)

The Australian Dollar (AUD) suffered after Australia’s unemployment rate report, which shup up to a 22-year high of 7.4%.

Nevertheless, today also saw Australia’s employment change figure rise to 210.8 thousand, leaving some ‘Aussie’ investors hopeful that jobs could return for many Australians in the months ahead.

Bjorn Jarvis, head of labour statistics at the ABS, commented:

‘The easing of COVID-19 restrictions in June saw an extra 280,000 people in the labour force, with more people in employment, and more actively looking and available for work.’

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) also struggled after New Zealand’s latest CPI figures revealed that domestic inflation had contracted 0.5% in the second quarter.

As a result, investors are now becoming increasingly concerned that New Zealand’s economic recovery could be much slower than previously expected.

As of Thursday, 16th July 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1028, GBP USD exchange rate was 1.2555, GBP AUD exchange rate was 1.801, GBP NZD exchange rate was 1.9202, GBP CAD exchange rate was 1.7048, and GBP CNY exchange rate was 8.7751.

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