After news over the weekend that travellers from the UK will have to quarantine after visiting Spain, airline and travel stocks tumbled yesterday. Last night, Spain’s Prime Minister, Pedro Sanchez, criticised the decision by the UK government, calling it an “error”.
The pound continues to be driven by dollar and euro movements this week. The euro is still benefitting from good news regarding the EU’s coronavirus recovery fund. Meanwhile, the dollar is suffering as COVID-19 cases continue to rise in the US. However, it has started to make a small recovery this morning ahead of the Federal Reserve’s meeting this week.
GBP: Travel stocks fall due to Spain quarantine announcement
Sterling reached a near five month high against the dollar yesterday, due to dollar weakness. As Brexit talks haven’t shown any real developments yet, the pound continues to be driven by other currencies.
Brexit and the economy are still major factors in determining the pound’s movements, so any news this week could have an affect on sterling.
After the announcement that UK travellers should quarantine after visiting Spain, travel and airline stocks dropped yesterday. The FTSE 100 also edged lower. A government source revealed yesterday that talks for a quarantine exemption are underway for travellers visiting some Spanish islands, such as the Balearics.
Reports have also suggested that quarantine for travellers from high-risk countries could be cut to 10 days, if they test negative for the virus.
EUR: Data fuels hopes of ‘V shaped’ recovery
The euro was strong against both the pound and the dollar yesterday, still benefitting from news that EU leaders finalised their coronavirus recovery package last week.
Any signs that the Eurozone is recovering economically and managing to contain the virus could also bode well for the single currency. IFO Business Climate figures for Germany were released yesterday morning, rising by 4.2 points and showing that the current situation for businesses is improving slightly. This fuels hopes of a ‘V shaped’ recovery for the Eurozone.
USD: Dollar makes small recovery ahead of Fed meeting
The dollar weakened to a near five month low against the pound and a two year low against the euro yesterday, as worries increase over the rising coronavirus cases in the US. However, it has made a small recovery this morning ahead of the Federal Reserve’s meeting this week
The Fed are expected to keep interest rates on hold and to reiterate the stance that rates will stay near to zero for the foreseeable future. However, the dollar has risen on hopes that the next fiscal rescue package will be announced to help the economy recover from the coronavirus crisis.
The US manufactured durable goods orders data were released yesterday and are slightly better than expected, according to the US Commerce Department. Orders for durable goods rose 7.3% in June, while economists had expected a 7.2% gain.