Pound to Euro Tumbles to One-Week Low as UK Lockdown Won’t End ‘With a Bang’

Pound (GBP) Slumps as UK Faces ‘Controlled’ Easing of Lockdown

The Pound (GBP) came under notable pressure during yesterday’s trading session after Boris Johnson conceded that the end of England’s strict new lockdown will be gradual, rather than with a ‘big bang’.

The legislation put before MPs to put the new lockdown into law will run until 31 March in order to allow a ‘controlled’ re-entry into the local tier system.

However, comments from Bank of England (BoE) Governor Andrew Bailey tempered these losses, as he told the Treasury Select Committee that the economic downturn in Q4 wasn’t as bad as forecast.

Looking ahead, with the lockdown still stoking concerns over the UK’s economic performance in the first quarter of 2021, it’s likely the Pound will remain on the defensive through today’s session.

 

Euro (EUR) Muted amid USD Resurgence

The Euro (EUR) was mostly rangebound on Wednesday after a rebound in the US Dollar (USD) curbed the single currency’s recent momentum due to the negative correlation in the pairing.

Further limiting the upside in the Euro was the publication of Germany’s consumer price index (CPI) which revealed the Eurozone’s largest economy remained in a state of deflation for the fourth consecutive month in December.

Coming up this morning, the focus for EUR investors will no doubt be on the publication of the Eurozone’s latest CPI figures. Will another lacklustre inflation reading in December push the Euro lower?

 

US Dollar (USD) Fluctuates as the Democrats Claim the Senate

The US Dollar (USD) initially retreated during yesterday’s session as expectations that the Democrats would gain control of the US Senate, paving the way for more stimulus, dampened demand for the safe-haven ‘Greenback’.

However, USD exchange rates bounced back following the publication of the latest ADP payroll figures, as a shock plunge in US employment growth unnerved investors and soured market sentiment.

Turning to today’s session, the publication of the latest ISM non-manufacturing PMI will be in the spotlight for USD investors, with a positive reading potentially reviving the market mood and denting the US Dollar.

 

Canadian Dollar (CAD) Firms as WTI Crude Passes $50 Hurdle

The Canadian Dollar (CAD) continued to rally on Wednesday, as news that Saudi Arabia will cut oil production over the next couple of months propelled WTI crude prices past the key $50 a barrel barrier, bolstering the appeal of the oil-sensitive ‘Loonie’.

 

Australian Dollar (AUD) Retreats from Highs on Disappointing Trade Figures

The Australian Dollar (AUD) fell back from its recent highs overnight on Wednesday as AUD investors were left disappointed by a larger-than-expected narrowing of Australia’s trade surplus in November.

 

New Zealand Dollar (NZD) Firms amid US Stimulus Hopes

The New Zealand Dollar (NZD) remained buoyed in overnight trade as expectations for more US stimulus after the Democrats won control of the Senate bolstered the appeal of the risk-sensitive ‘Kiwi’.

Matthew Andrews

Contact Matthew Andrews


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