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The Pound holds gains despite Fitch downgrade

Hi everyone,

In contrast to the start of last week, the Pound is performing well today and it's a case of 'what might have been' if the UK's sovereign debt wasn't downgraded over the weekend by the ratings agency Fitch. A mixture of the recent stimulus package into the economy by the Government and uncertain post-Brexit trading with the EU were the causes for the downgrade from AA to AA-. It is expected that many other countries will also be downgraded in the short term on the back of the coronavirus' damage to economies.

In terms of the currency market, a downgrade is usually seen as negative because it means bonds for the country in question are less attractive and so investors pull out and look elsewhere, depreciating the currency. But that hasn't happened this time and we believe it's because other countries are due to follow suit. Fitch also added that the rapid response from the UK and BoE should economically limit any second-round effects of the outbreak and allow the UK to recover quickly.

EU finance ministers are expected to give a conference this week to determine the collective steps they will take to tackle the coronavirus damage. Last week the decision was split on what to do with Spain, Italy & France wanting to create an EU-backed debt fund named 'Coronabonds", but Germany, Holland & Austria are in favour of loans. Whatever the decision, there is bound to be some sort of fallout. 

It's a mammoth week data-wise for both the EU & US and so daily market volatility is expected and with most figures due to be poor, the Pound may be able to capitalize. 

 

 

 

Upcoming Data
 

 

Tuesday, 31st March, 2020


06:00 EU - German import price index
06:00 UK - GDP, business investment & government spending
07:55 EU - German unemployment rate
09:00 EU - Euro-Zone CPI
14:00 US - Consumer confidence

 

Wednesday, 1st April, 2020


06:00 EU - German retail sales
08:00 EU - Euro-Zone PMI
08:30 UK - PMI
09:00 EU - Unemployment rate
11:00 US - Mortgage applications
14:00 US - Employment, manufacturing and spending figures


Thursday, 2nd April, 2020


09:00 EU - Euro-Zone PPI
12:30 US - Jobless claims ™ balance
14:00 US - Durable goods & factory orders




Friday, 3rd April, 2020

 
00:00 EU - German & French sovereign debt rating
08:00 EU - Euro-Zone PMI
08:30 UK - PMI
09:00 EU - Euro-Zone retail sales
12:30 US - Non-farm payrolls, unemployment & average earnings
14:00 US - Non-manufacturing/services composite 

  

 
 
 



Dan Waterman
Sales Director

 
 
 


 

 
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