Pound US Dollar Soars on Lockdown Exit Plan, GBP/EUR Firm
The Pound (GBP) started strongly this week, rallying in response to Boris Johnson’s unveiling of his roadmap to exit lockdown in England.
Following the outline to ease restrictions Sterling has continued to make solid gains, with the Pound to US Dollar exchange rate holding near three-year highs and GBP/EUR strengthening at €1.15.
The four-stage plan may be a little more cautious than GBP investors had hoped, but the prospect that all restrictions could be lifted by the summer was still enough to drive Sterling higher.
Meanwhile, the Pound looks to face some pressure this morning after the UK’s latest jobs figures reported unemployment continued to climb in December.
On the other hand, the accompanying earnings figures revealed a sharp uptick in wage growth, which could help to temper any weakness in Sterling.
Euro Rises on USD Weakness
The Euro (EUR) ticked higher on Monday as the single currency’s negative correlation with the US Dollar (USD) allowed it to climb as the latter weakened.
Elsewhere, European Central Bank (ECB) President Christine Lagarde appeared upbeat about the ECB’s ability to support ‘all sectors of the economy’ through the bank’s Pandemic Emergency Purchase Programme (PEPP).
Coming up this morning, the Eurozone’s latest consumer price index could offer some support to the Euro as it is expected to confirm inflation in the bloc rebounded sharply last month.
US Dollar Dips in Upbeat Trade
The US Dollar opened this week’s session on the back foot, as a broadly positive market mood limited demand for the safe-haven currency.
Adding additional pressure to the ‘Greenback’ was a modest pullback in US Treasury yields during the European trading session.
Looking ahead, the spotlight today will be on the start of Federal Reserve Chair Jerome Powell’s two-day testimony in front of Congress.
Powell is expected to reiterate the Fed’s current dovish bias, which could further dent USD exchange rates.
Canadian Dollar (CAD) Dips in Spite of Surging Oil Prices
The Canadian Dollar (CAD) fell back on Monday, with the commodity-linked ‘Loonie’ failing to find support in spite of a more than 2% spike in WTI oil prices.
Australian Dollar Buoyed by Risk-On Trade
The Australian Dollar (AUD) ticked higher overnight on Monday, with the prevailing risk-on mood, as well as the weakness of the US Dollar, helping to bolster the appeal of the ‘Aussie’.
New Zealand Dollar Slumps as Retail Sales Miss
The New Zealand Dollar (NZD) fell back in overnight trade in response to New Zealand’s latest retail sales figures, which revealed an unexpected contraction of sales growth in the fourth quarter of 2020.