Pound to Euro Strengthens after UK Approves Vaccine
The Pound (GBP) was mostly rangebound during yesterday’s trading session as the Brexit deal euphoria began to fade, with analysts raising concerns over the exclusion of the service sector from the new trade accord with the EU.
Further limiting the appeal of Sterling were concerns over the UK coronavirus situation, amid suggestions that tougher restrictions could be imposed to curb the spread of the more infectious variant.
Coming up, news this morning that the Oxford-Astra Zeneca coronavirus vaccine has been approved for use in the UK is boosting GBP exchange rates so far today.
As the UK’s second approved vaccine, the UK government has ordered enough for the majority of the population, increasing hopes of a faster recovery.
The vaccine optimism has pushed the Pound to Euro exchange rate up almost half a cent.
Meanwhile, the GBP/USD exchange rate is also climbing near $1.36, close to the highs earlier in December.
Also in focus will be the Parliamentary vote on the Brexit deal. While the deal is expected to pass, some dissent from within the Conservative party may raise questions over the unity of the government going forward.
Euro (EUR) Subdued as New Coronavirus Variant Spreads
Aside from modest gains against the US Dollar, the Euro (EUR) struggled to find support on Tuesday amidst ongoing coronavirus fears.
This comes in the wake of reports suggesting that the new, more-viral strain of Covid-19 has already been detected in most European countries, stoking concerns cases on the continent could accelerate again despite the lockdown measures currently in place in many countries.
However, news of an investment deal between the EU and China was enough to help limit the downside in the single currency.
In the continued absence of any notable Eurozone data releases, the focus for EUR investors is likely to remain on the coronavirus, where rising cases could put a dampener on the Euro.
The Euro to US Dollar is continuing to strengthen so far today as risk-on trade weighs on safe-haven USD demand.
US Dollar (USD) Dented by Stimulus Hopes
The US Dollar (USD) struck lower through yesterday’s trading session as a rally in equity markets dented demand for the safe-haven ‘Greenback’.
This came amidst a prevailing risk-on tone, with market sentiment bolstered following the news that the US House of Representatives had passed a bill to increase direct coronavirus relief payments from $600 to $2,000.
Looking ahead, should this upbeat market mood persist then we are likely to see the US Dollar extend its downtrend through today’s session.
Canadian Dollar (CAD) Firms as Oil Prices Jump
The Canadian Dollar (CAD) struck higher on Tuesday, with the appeal of the commodity linked currency being bolstered by a jump in oil prices, which propelled WTI crude over $48 a barrel.
Australian Dollar (AUD) Buoyed by US Fiscal Stimulus
The Australian Dollar (AUD) climbed overnight due to sustained market optimism on the back of US stimulus hopes.
New Zealand Dollar (NZD) Pushed Higher on Market Optimism
The New Zealand Dollar (NZD) also continues to benefit from risk-on trade, with US stimulus, Brexit and now another vaccine approval in the UK supporting the upbeat mood.