Pound Hits New Highs vs Euro and US Dollar
GBP exchange rates continued finding support through yesterday’s trading session, with the Pound hitting highs vs the Euro and US Dollar.
Thanks to the UK’s impressive vaccination rollout, with over 7% of the population so far receiving at least one dose, Sterling made significant gains.
This uptick in Sterling was aided by the UK’s consumer price index as December’s release reported a stronger-than-expected acceleration in inflation.
Looking ahead, so long as new daily coronavirus cases continue their downtrend and the vaccination rollout continues to accelerate, there is scope for the Pound to extend its rally today.
The upbeat market mood is pushing GBP exchange rates higher this morning, with the Pound to US Dollar shooting past $1.37 to a 32-month high.
At the same time, the Pound Euro exchange rate is at an eight-month high at €1.13.
Euro Dented by Covid-19 Concerns
EUR exchange rates were on the defensive on Wednesday as EUR investors continued to express dismay at the EU’s slow rollout of coronavirus vaccinations.
Further pressuring the single currency were concerns that other countries in the EU could join Germany in extending and tightening their lockdowns amidst mounting concerns about the spread of more contagious variants of Covid-19.
In focus for EUR investors today will be the outcome of the European Central Bank’s (ECB) first policy meeting of 2021. Will we see policymakers voice more concerns about the recent appreciation of the Euro?
After the Euro US Dollar exchange rate weakened yesterday, risk-on trade is supporting the EUR/USD exchange rate this morning. Although this could change after the ECB’s announcement.
USD Exchange Rates Weaken in Upbeat Trade
The US Dollar was on the back foot through much of yesterday’s session as demand for the safe-haven currency has dented by optimism ahead of Joe Biden’s inauguration.
While the ‘Greenback’ rallied in the second half of the European session, this proved short lived as markets were cheered further by Biden’s first moves after being sworn in.
US politics may take a temporary back seat later today, however, as USD investors keep a close eye on last week’s initial jobless claims, amidst concerns new claims could have topped 1 million.
Canadian Dollar Strengthens as BoC Hints at Further Tapering
CAD exchange rates ticked higher on Wednesday following the Bank of Canada’s (BoC) latest policy meeting, in which it left interest rates on hold and dropped some hints that it may look to taper its quantitative easing programme in the future.
Australian Dollar Rallies on Surprise Drop in Unemployment
The Australian Dollar rallied overnight on Wednesday, with the appeal of the ‘Aussie’ being bolstered by an improvement in risk appetite, as well as Australia’s latest jobs figures, which reported an unexpected drop in domestic unemployment last month.
New Zealand Dollar Jumps in Risk-On Trade
The New Zealand Dollar rocketed higher in overnight trade, as the prevailing upbeat mood following Biden’s inauguration bolstered the risk-sensitive ‘Kiwi’.
However, the publication of New Zealand’s latest CPI figures could put a dampener on the ‘Kiwi’ later tonight. Domestic inflation is forecast to have slowed in the fourth quarter in spite of the Reserve Bank of New Zealand’s (RBNZ) considerable stimulus efforts.