Sterling remains under pressure however, with a slip below 1.23 on the back of the latest consumer confidence figures released from GfK. Highlighting that more than 70pc of UK businesses have confirmed that they were or would be impacted by the Coronavirus pandemic, demonstrating the intense impact that Covid-19 was having at the beginning of March before the UK government put us in to virtual lockdown.
The stats confirm a sharp decline in the willingness of consumers to make major purchases. Lloyds business sentiment survey reports a similar picture with business confidence hitting it’s lowest level in over 11 years where we were at the height of the global financial crisis. Both business and consumer confidence are key signals on economic performance as consumer spending and business investment are key to promoting economic expansion.
UK GDP released at 9.30 this morning will be important amidst gloomy forecasts from the Centre for Economics and Business Research (CEBR) suggesting that UK output could fall by as much as 15% in the second quarter of the year and a sharp increase in unemployment.
UK Trade Negotiations With the EU Under Pressure
Whilst the UK government deal with more urgent matters at home the clock continues to countdown to our 31st December deadline for a trade agreement to be confirmed with the EU. Until now any question on extending this deadline has been met with denial from government however, Reuters reports that EU diplomats expect an extension to be requested from the UK in the coming months as “the coronavirus pandemic complicates the already very ambitious schedule,” according to David McAllister, chair of the European Parliament’s Brexit group.
US Housing Market Data Stronger Than Expected
Pending Home Sales data from the US was significantly higher than predicted yesterday posting a three year high for February, despite expectations of a decline of up to 5% perhaps a sign that consumers have been quick to react to the cut in interest rates from the Federal Reserve.
The US however, continues to see a sharp increase in the cases of coronavirus reporting almost 145,000 cases with New York, arguably the financial hub of the States exceeding 59,000 cases and concern that this is prophetic to how the pandemic will spread in other US states.
Donald Trump remains under heavy criticism about his approach to tackling the current situation, with accusations of Trump using his daily briefings as a corporate advertising platform and making misleading statements and only increasing the uncertainty around the Pandemic. Social distancing measures have now been extended to April 30th.
Despite the impact that Covid-19 is having on the US the US Dollar remains a traditional safe haven currency and in times of uncertainty there is often a surge in demand. This will continue to put pressure on the pound as the world remains under the grip of the coronavirus spread. Heavy resistance at 1.25 could be a challenge to Sterling over the coming days.
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