Potential Negative Interest Rate Stops Pound In Its Tracks

After a solid run, the Pound hit some bumpy ground during trading on Thursday. This meant that the foreign exchange rate against the US Dollar remained unchanged at 1.2978 while the rate against the Euro dropped to 1.094. This retreat was down to the latest announcement on interest rates from the Bank of England. It was indicated that negative interest rates might have to be introduced but as trading started today, news that retail sales were better-than-expected might help the currency to regain some of those losses.

There was not much in the way of strong news or data to influence the Euro on Thursday after it was announced that headline inflation had shrunk by 0.02% during August. Along with this, the news that coronavirus cases are continuing to increase leaving Europe facing a serious situation also meant that any potential upside to the Euro was limited.

A disappointing unemployment reading left the US Dollar sluggish through trading on Thursday as it struggled for any real support. Job claims were higher than expected and this was a clear indication that the US economy is still way off where it needs to be.

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