Pound Down this Week Following Bank of England latest Statement

Lebanese Forex Market

The Lebanese Pound (LP) remained steady within the official range of $/LP 1,514 – 1,514.5 against the dollar, with a mid-price of $/LP 1,514.25 by the week ending June, 19 2020.

To-date, the peg continues to be supported by the Central Bank’s total foreign assets which settled at US$33.10B in Mid-June 2020.

In turn, the dollarization ratio for private sector deposits increased from 76.02% in December 2019 to 78.94% in April 2020.

In addition, the Euro depreciated against the dollar-pegged LP with the currency pair going from last week’s €/LBP 1,702.87 to €/LBP 1,692.63 by the week ending June, 19 2020. In turn, the Nominal Effective Exchange Rate (NEER) of the LBP rose by a weekly 0.56% over the week, to stand at 122.02 points.

International Forex Market

The Euro/USD went down from last week’s €/USD 1.1296 to €/USD 1.1228 by June 19, 2020.       The euro pushed lower this week following the appreciation of the US dollar. In fact, the dollar considered as a safe haven gained this week as demand for safe haven assets increased amid fears of the second wave of coronavirus. However, the pressure on Eur/usd might change following the European Union (EU) summit today. In details, the EU leaders will discuss the European Commission’s proposal for a 750 billion euro ($840 billion) recovery package, which controversially includes 500 billion euro worth of grants to member states. Meanwhile , worth mentioning  that the pound hit a three-month low against the euro and a new low for the month against the dollar, with sentiment still being hurt by the Bank of England’s apparent reluctance to increase monetary stimulus on Thursday. The BoE increased the overall envelope for its quantitative easing purchases by 100 billion pounds ($125 billion), but indicated that the pace of bond-buying will slow.

Commodities

In turn, Gold witnessed a weekly uptick of 0.18% to close the week at $1,732.61/ounce. Moreover, U.S crude oil prices rose above $40 a barrel this week after reassurance that the OPEC+ group of producers are largely sticking to their deal on output restraint.

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