A combination of UK coronavirus vaccine hopes and stronger UK manufacturing date kept the Pound US Dollar (GBP/USD) exchange rate appealing this morning. However, Sterling still lacks the drive to push GBP/USD to new multi-year-highs for now.
Demand for the US Dollar is fairly resilient amid market uncertainty over last week’s stock market chaos and the global coronavirus pandemic. This is limiting GBP/USD gains.
Last Week: Sterling Wins on Coronavirus Vaccination Hopes
The Pound was one of the market’s most appealing major currencies last week. With Britain’s coronavirus vaccine schemes further ahead than those of other major economies, optimistic vaccine developments continued to boost the Pound.
Still, Sterling’s gains against the US Dollar were limited. The US Dollar was strong on market risk-aversion for most of the week, as coronavirus infection rates and stock market chaos rattled global markets.
As the US Dollar is a safe haven currency, this meant it benefitted as investors looked for safer investments.
Three Things to Watch For This Week:
- Non-Manufacturing PMIs
Wednesday will see the publication of UK services PMIs and US non-manufacturing PMIs. They will give markets a fuller idea of how the UK and US economies performed in January, as the coronavirus pandemic surged across the globe again.
- Bank of England (BoE) Policy Decision
Thursday will see the Bank of England (BoE) hold its February policy decision. If the bank is more optimistic on Britain’s outlook due to vaccine hopes, the Pound could be in for further strength.
- US Non-Farm Payrolls
January’s key US Non-Farm Payrolls report will be published on Friday. This US job market report is often a key barometer of US economic health, so any surprises here could have implications for Federal Reserve and US Dollar outlooks.
With much key UK and US data due in the coming days, as well as potential for more coronavirus pandemic developments, there will be plenty to drive the Pound to US Dollar exchange rate – volatility is highly possible.