Pound to US Dollar Rebounds as Democrats Look to Claim Control of the US Senate

GBP Exchange Rates Struggle amid Lockdown Blues, Pound to US Dollar Recovers

The Pound (GBP) remained mostly muted through yesterday’s trading session, although the Pound to US Dollar made gains, amidst reports that the UK’s new strict lockdown could remain in place until March.

However, Chancellor Rishi Sunak’s announcement of £4.6bn of additional support to businesses helped alleviate some of the pressure on Sterling, and prevent any notable losses against the Euro.

In contrast, the Pound to US Dollar exchange recovered back to $1.36 as USD exchange rates remained weak.

Coming up, a speech by Bank of England (BoE) Governor Andrew Bailey will be the focal point for GBP investors today.

Bailey is expected to address the UK’s latest lockdown, which may weaken the Pound if he warns that it is likely to dampen the BoE’s economic forecasts for 2021.


Euro (EUR) Muted on Vaccine Concerns

The Euro (EUR) struggled to find direction on Tuesday, with the single currency’s bullish momentum evaporating amidst growing concern over the slow rollout of coronavirus vaccines across the EU.

Further limiting the appeal of the Euro was the publication of Germany’s latest jobs figures, which reported another contraction in employment growth through December.

In the spotlight today will be the publication of Germany’s consumer price index later this afternoon. The Euro potentially faces some pressure if inflation in the Eurozone’s largest economy continued to languish at –0.3% in December.

The Euro to Pound exchange rate continues to hold gains as GBP exchange rates struggle with the implications of the latest lockdown

USD Stumbles in Upbeat Trade, Pound to US Dollar Exchange Rate Rebounds

After some initial resilience, the US Dollar (USD) found itself on the defensive again yesterday as the prospect of a Democrat majority in the Senate buoyed market sentiment and dampened demand for the safe-haven ‘Greenback’.

This USD sell-off was reinforced by some positive US data releases such as the ISM manufacturing PMI striking a two-year high in December.

Turning to today’s session, with early results suggesting that the Democrats will claim both seats in the Georgia Senate runoff, it looks as though the US Dollar will remain under pressure.

Meanwhile, the USD selling bias has allowed the Pound to US Dollar exchange rate to make solid gains so far this morning.


Canadian Dollar (CAD) Supported by Buoyant Oil Prices

The Canadian Dollar (CAD) ticked higher again on Tuesday as another session of robust daily gains in crude oil prices helped to bolster the appeal of the commodity-linked ‘Loonie’.


Australian Dollar (AUD) Firms in Upbeat Market Mood

The Australian Dollar (AUD) rallied overnight on Tuesday, with the appeal of the risk-sensitive ‘Aussie’ bolstered amid rising expectations for a Democrat victory in Georgia.


New Zealand Dollar (NZD) Buoyed by US Stimulus Hopes

The New Zealand Dollar (NZD) also climbed higher in overnight trade, amid hopes that the incoming US administration will be able to pursue more generous stimulus packages.

Matthew Andrews

Contact Matthew Andrews