GBP Sidelined by Brexit Trade Friction, Pound US Dollar Dips
GBP exchange rates traded in a narrow range at the start of this week’s session, but the Pound US Dollar exchange rate fell further away from last week’s highs.
Concerns over the impact of Brexit trade friction on the UK economy were offset by comments from Boris Johnson regarding lockdown, limiting Sterling.
Johnson said that the government will be ‘looking at the potential of relaxing some measures’ before mid-February, stoking hopes that parts of the economy may be able to start opening up again.
Meanwhile, the Pound looks to be under pressure this morning after the release of the UK’s latest jobs report revealed a rise in the unemployment rate in November, although strong accompanying wage growth figures look to have tempered these losses somewhat.
Euro Stumbles Following Slump in German Business Morale
The Euro was on the defensive on Monday, after the latest German IFO business climate index printed below expectations.
The index slumped to its worst levels in six months as German businesses struggled in the face of stricter lockdown measures, pointing to a weak start to 2021 for the Eurozone’s largest economy.
In the absence of any notable EUR data releases today, the direction of the Euro may be driven by European coronavirus headlines, where ongoing concerns over delays to vaccinations could drag on the single currency.
US Dollar Firms against Pound and Euro amid Biden Stimulus Pushback
USD exchange rates strengthened during yesterday’s European trading session as markets were spooked by reports of a bipartisan pushback against President Biden’s massive stimulus package.
Senators have expressed concerns over the size of the package and other parts included in the stimulus bill, with investors favouring the safe-haven ‘Greenback’ amidst fears Biden may face an uphill battle to get it through Congress.
Looking ahead, USD investors will be keeping a close eye on Biden as he continues to sign executive orders, many of which are likely to have an impact on the US economy.
Canadian Dollar Muted as Oil Prices Slip
The Canadian Dollar was mostly subdued on Monday as the appeal of the commodity-linked ‘Loonie’ was undermined by a modest fall in oil prices.
Australian Dollar Undermined by US-China Tension
The Australian Dollar stumbled overnight on Monday, with the risk-sensitive currency being dented after US-China tensions rose after Beijing signalled plans for a military drill in the disputed South China Sea.
New Zealand Dollar Weakened by Risk-Off Trade
NZD exchange rates also stumbled in overnight trade as the downbeat market mood reflected poorly on the risk-sensitive ‘Kiwi’.