Pound to Euro Bolstered by Vaccine Hopes, GBP/USD Dips
GBP exchange rates found some modest gains on Thursday, while the Pound to Euro exchange rate strengthened, allowing GBP/EUR to hit €1.11 this morning.
These gains came as GBP investors welcomed the news that the military will be deployed to assist with the UK’s massive vaccination programme, which is hoped will allow England to emerge from lockdown sooner rather than later.
However, these gains were capped somewhat by speculation that the Bank of England (BoE) will be forced to ease its monetary policy further to help counter the economic impact of the latest lockdown.
In the absence of any notable UK data releases today, it’s likely we will see UK coronavirus developments remain the key concern for GBP investors, with Sterling sentiment potentially suffering if cases continue to rise at an alarming rate.
Euro (EUR) Undermined by Lacklustre Data
The Euro (EUR) was on the defensive through yesterday’s trading session in response to some underwhelming EUR data releases.
The latest Eurozone inflation and retail sales releases both underperformed, with a sharp slump in the bloc’s retail sales growth in November proving particularly worrying to EUR investors.
These poor data releases left EUR/USD a cent lower and the Euro to Pound exchange rate weakening.
Turning to today’s session, we saw the publication of Germany’s latest industrial production figures earlier this morning, where a surprisingly robust reading may lend some support to the euro today.
US Dollar (USD) Rallies Following Bump in US Bond Yields
The US Dollar (USD) struck higher yesterday, strengthening in response to a rise in US bond yields following confirmation that the Democrats had gained control of the Senate.
This uptick in USD exchange rates was then reinforced by a stronger-than-expected ISM non-manufacturing PMI release and surprise drop in last week’s initial jobless claims.
In the spotlight today we have the publication of December’s highly influential US non-farm payroll release.
Last month’s figures are expected to report a notable slowing of employment growth, which could translate into more support for the safe-haven US Dollar if it unnerves investors.
Canadian Dollar (CAD) Steady as WTI Oil Consolidates Above $50
The Canadian Dollar (CAD) largely held its ground on Thursday, with the oil-sensitive ‘Loonie’ underpinned by the recent uptick in crude prices as WTI consolidated above $50 a barrel.
However, CAD exchange rates could face some headwinds later this afternoon, with the release of Canada’s latest employment figures as unemployment is forecast to have crept higher in December.
Australian Dollar (AUD) Rallies on Vaccine Optimism
The Australian Dollar (AUD) struck higher overnight on Thursday following reports that Pfizer’s coronavirus vaccine is effective against the new strains found in the UK and South Africa buoying the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Strengthens in Risk-On Trade
The New Zealand Dollar (NZD) also strengthened in overnight trade as a pullback in the US Dollar and prevailing risk-on tone gave plenty of room for the ‘Kiwi’ to run.