Pound (GBP) Rallies on Vaccine and Coronavirus Optimism
The Pound shot higher at the start of yesterday’s session following news that AstraZeneca’s coronavirus vaccine reports up to 90% efficacy.
This sent the Pound to US Dollar exchange rate to an 11-week high on hopes, the UK government, which has pre-ordered 100 million doses of the coronavirus vaccine, could soon roll it out to the public.
Sterling held its gains despite the latest UK PMIs revealing service sector activity contracted in November, although both beat expectation and manufacturing revealed strong growth on the previous month.
At the same time, Brexit optimism continues underpinning Sterling gains, with Irish Taoiseach Michael Martin commenting a Brexit deal outline could be clear by the end of the week.
Looking ahead, Brexit headlines could extend Pound gains today if optimism continues that a UK-EU trade deal is close to being agreed.
Euro (EUR) Weakens as Service Sector Shrinks
Meanwhile, the Euro struggled yesterday as the Eurozone’s PMIs showed manufacturing growth slowed in November and services fell further than expected into another month of contraction.
The PMIs revealed the impact of European national restrictions and lockdowns as both Germany and France showed significant deterioration on the month.
The Ifo business climate index is the focus for EUR investors this morning as, while business sentiment dropped on last month, the index came in slightly higher than expected.
US Dollar (USD) Struggles amid Risk-On Mood
Trade in the US Dollar lost ground on Monday, falling sharply early in the day on a wave of risk-on trade after more positive news broke of another coronavirus vaccine.
USD exchange rates were able to regain some losses later in the day, however, on the back of unexpectedly robust growth in manufacturing and service PMIs.
However, risk-on trade appears to have returned this morning following news that Donald Trump has finally begun formal transition to president-elect Joe Biden, which may leave the ‘Greenback’ trending lower today.
Canadian Dollar (CAD) Holds Ground as Oil Prices Rise
The Canadian Dollar held onto a positive footing yesterday as oil prices continued rising on the prospect of increased global demand following more positive vaccine news.
Australian Dollar (AUD) Surges in Upbeat Trade
The Australian Dollar (AUD) rocketed higher overnight on Monday, as relief that the US election saga is finally over and lingering optimism over another coronavirus vaccine bolstered the appeal of the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Soars on Possible RBNZ Remit Change
The New Zealand Dollar (NZD) was propelled higher in overnight trade following the news that the Reserve Bank of New Zealand (RBNZ) is considering adding house prices to its mandate, a move which would likely prompt the bank to tighten its monetary policy.