Pound to US Dollar Near Two-Year High as UK Vaccinations Proceed at Strong Pace
GBP exchange rates strengthened on Thursday, with the Pound to US Dollar hovering just below two-year highs while GBP/EUR approached two-month highs.
The Pound’s gains came amidst the positive sentiment surrounding the acceleration of the UK’s vaccination programme as the total number of people vaccinated passed 2.2 million.
This offset ongoing concerns over the high number of cases and the strain this has placed on the NHS, which could in turn push the government into imposing stricter restrictions.
Meanwhile, the Pound may find some additional support this morning following the UK’s GDP data release for November.
GDP figures revealed a smaller-than-expected -2.6% contraction of growth in November, beating the -5.7% forecast. The contraction reflects the lockdown measures in place that month but are better than previously feared.
With market mood souring this morning, the Pound against the US Dollar and Euro exchange rates are struggling.
Euro Stumbles Following ECB Minutes
The Euro (EUR) ticked lower against the majority of its peers yesterday following the publication of the minutes from the European Central Bank’s (ECB) December policy meeting.
The minutes revealed that members of the ECB’s Governing Council voiced concerns over recent movement in EUR exchange rates, with the risk that a stronger Euro will have a negative impact on the inflation outlook.
Combined with market risk aversion, this has left the Euro to US Dollar exchange rate trending lower for the third consecutive session this morning.
Meanwhile, the risk-off tone is keeping the Euro against the Pound steady so far today.
Looking ahead, European coronavirus developments are likely to be the main focus for EUR investors during Friday’s session, with the Euro potentially coming under pressure if traders continue to express concern about the speed of the vaccination rollout across Europe.
US Dollar Dips after Powell Signals Accommodative Stance
After holding its growth through most of the day, the US Dollar (USD) retreated on Thursday evening following comments from Federal Reserve Chair Jerome Powell, in which he reiterated the bank will maintain its accommodative stance.
However, the US Dollar clawed back some of these losses overnight after US President-elect Joe Biden’s stimulus announcement failed to trigger a risk rally.
Biden’s stimulus plan appears priced in by markets already, leaving market sentiment sour and the US Dollar recovering against the Pound and Euro.
Coming up later today is the publication of the latest US retail sales figures. Will another lacklustre month of sales dent the appeal of the US Dollar?
Canadian Dollar Muted as Oil Prices Slip
The Canadian Dollar (CAD) was rangebound through yesterday’s trading session, as the appeal of the oil-sensitive ‘Loonie’ was knocked by a drop in WTI crude prices after the Organization of the Petroleum Exporting Countries (OPEC) left its 2021 forecast for global oil demand unchanged in spite of the global rollout of coronavirus vaccines.
Australian Dollar Muted Despite US Stimulus Announcement
The Australian Dollar (AUD) struggled to find support overnight on Thursday after the market reaction to Biden’s stimulus announcement proved muted, amidst suggestions the $1.9 trillion plan was already priced in.
New Zealand Dollar Stumbles in Muted Risk Trade
The New Zealand Dollar (NZD) was on the defensive in overnight trade as a rebound in the US Dollar limited the appeal of the risk-sensitive ‘Kiwi’.