The forex market has shown much stability despite many uncertainties due to global pandemic COVID-19. This is because many analysts have already predicted the economic slowdown that will be caused by lockdowns.
This stability is also due to actions of Central Bank. in USA, interest rates have been bought to zero. Similar measures have been bought in place by the UK and Japan.
Further, there are several factors that will affect the currency market in May. From negative interest rates to Brexit to the concerns about second waves of disease. All these will affect forex market.
In this article we have compiled some currency pair tips for investment in 2020 –
#1. GBP/USD
GBP has been quite volatile due to the impact of corona virus and ongoing negotiations on Brexit. The economy at the same time has been quite affected due to pandemic. A recent study shows that services PMI has dropped to 13.4, which is quite low.
Also the bank rates and quantitative easing policies remain unchanged. Bank of England will decide on asset purchasing in June.
Therefore due to Brexit, corona virus, and bank policies, GBP/USD will see more volatility in the coming months.
#2. USD/SEK
The pair peaked at 10.38 in March, but after that, it has seen a slow downward trend and is now trading at 9.80. Sweden has adopted a relaxed strategy in dealing with with corona virus.
The government did not order any lock down and the number of infections have been increasing. This can negatively impact the economy.
With interest rates at zero, the USD/SEK pair can witness volatility and show a downward trend.
#3. USD/ZAR
The currency pair reached an all-time high of 19.0946 as the corona virus outbreak. The South African economy was in recession before the pandemic started.
The currency pair of USD/ZAR has been in consolidation and has reached an all-time high as the country starts to reopen. This has led to low volatility in trading.
The South African Central Bank will give its decision on interest rates on 21st May. Also the base lending rate has been at a historic low of 4.25%. This can lead to an increase in volatility in forex trading of this currency pair.
#4. USD/NOK
The currency pair is to be watched in May due to a fall in crude oil trading due to global lockdown. The pair reached a record high of 11.7527 in March after which the pair has been relatively calm in trading.
The country has started to reopen its economy due to which the crude oil prices have been resilient. This movement in crude oil prices can lead to an increase in volatility.
#5. EUR/USD
The EUR/USD pair reached a record high of 1.1447 after which the pair has been moving sideways. There are several factors that can lead to volatility in the trading of this currency pair. First, the futures market in the US has been trading on negative interest rates. Second, there has been growing tension between Germany and the EU.
Final Word
This is the top currency pairs to look out for in 2020.
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