GBP Surge on Vaccine Optimism, Pound Euro Exchange Rate Soars
The Pound (GBP) started strongly this week, with the Pound Euro exchange rate hitting a nine-month high at €1.14. At the same time, the Pound US Dollar exchange rate reached its best in nearly three years above $1.39.
Sterling rallied on growing hopes the UK could soon be in a position to start reopening its economy.
This was spurred by the news that the UK government had hit its target to offer vaccines to the 15 million most vulnerable in the country, as well as comments by Boris Johnson indicating the UK’s current lockdown will be its last.
Looking ahead, the Pound looks well positioned to maintain its upward trajectory so long as UK coronavirus developments remain positive.
Euro Muted Despite Draghi Hopes
The Euro (EUR) struggled to find any strong directional bias on Monday as some positive Italian political news was offset by underwhelming Eurozone data.
This saw hopes that former European Central Bank (ECB) President Mario Draghi could bring some stability to Italy after becoming Prime Minister being offset by data showing a larger-than-expected contraction in Eurozone industrial production in December.
In the spotlight today is the publication of the latest ZEW survey from Germany. Will a deterioration of economic sentiment in Europe’s largest economy drive the Euro lower?
US Dollar Spurned in Risk-on Trade
The US Dollar (USD) opened this week on the defensive, with investors shunning the safe-haven currency as a clear risk-on bias prevailed.
This upbeat market mood appeared to be mostly driven by US stimulus optimism, with investors hoping that the conclusion of Donald Trump’s second impeachment trial will help to focus minds in Washington back on President Biden’s $1.9 trillion relief package.
Turning to today’s session, we may see the US Dollar mount a recovery as the currency looks to be supported by a surge US Treasury yields.
Canadian Dollar Rallies as WTI Oil Tops $60
The Canadian Dollar (CAD) was underpinned by a strong pick-up in oil prices on Monday, with the appeal of the commodity-linked ‘Loonie’ being bolstered as WTI crude prices passed $60 a barrel for the first time since January 2020.
Australian Dollar Stumbles on Dovish RBA Minutes
The Australian Dollar (AUD) trended lower overnight on Monday, as the minutes from the Reserve Bank of Australia’s (RBA) February policy meeting struck a dovish tone, with policymakers citing the need for ‘significant monetary support’.
New Zealand Dollar Dented by Coronavirus Concerns
The New Zealand Dollar (NZD) also struggled in overnight trade after NZ Prime Minister Jacinda Ardern announced that the recent coronavirus outbreak in Auckland was the more infectious UK variant.