GBP Exchange Rates Buoyed by Vaccine Optimism, Pound US Dollar Hits Highs
The Pound eked out modest gains yesterday, while the Pound US Dollar exchange rate firmed at $1.38, hitting a 33-month high.
The UK’s positive progress with its vaccination programme continued buoying Pound exchange rates.
In addition, Sterling continued to benefit from the Bank of England’s (BoE) recent policy decision, in which the bank indicated that negative rates are off the table.
Looking ahead, the focus for GBP investors in the second half of the week will be the UK’s latest GDP release on Friday, ahead of which we may see investors reluctant to make any bullish bets on the Pound.
Anticipation ahead of tomorrow’s data releases has left the Pound trading in a narrow range this morning. The Pound Euro exchange rate starts subdued at €1.14 and GBP/USD continues to hold just below near three-year highs.
Euro Boosted by USD Weakness
The Euro (EUR) maintained a positive trajectory on Wednesday as the single currency continued to benefit from its negative correlation with the US Dollar (USD).
However, reports that Germany’s government plans to extend its national lockdown until at least 14 March tempered these gains.
Looking ahead, with the EU’s vaccination rollout falling further and further behind the UK and US, any additional upside in the Euro may prove limited.
US Dollar (USD) Weakens Following CPI Miss
The US Dollar (USD) fell back during yesterday’s European trading session as the latest US consumer price index underwhelmed.
Headline US inflation reportedly held at 1.4% in January, missing expectations for a rise to 1.5%, weakening US Treasury yields, which alongside the risk-on tone undermined demand for the ‘Greenback’.
Coming up, the only data release of note today will be the latest US initial jobless claims, which could extend some support to the US Dollar as claims are expected to have continued to drop last week.
Canadian Dollar (CAD) Subdued in Spite of Robust Oil Prices
The Canadian Dollar (CAD) failed to find much support through Wednesday’s trading session, with the commodity-linked currency seemingly unable to attract investors despite oil prices continuing to creep higher.
Australian Dollar (AUD) Cheered by Biden-Xi Call
The Australian Dollar (AUD) rallied again overnight on Wednesday following a positive phone call between US President Joe Biden and his Chinese counterpart, Xi Jinping, which helped to cheer market sentiment.
New Zealand Dollar (NZD) Firms in Risk-On Trade
The New Zealand Dollar (NZD) also struck higher in overnight trade, with the risk-sensitive ‘Kiwi’ benefiting from the upbeat market mood and USD selling bias.