Pound (GBP) Weakens as UK’s Vaccination Programme to Face Hurdles
The Pound was on the back foot at the end of last week’s session as the recent warning from the NHS about the shortage of vaccines next month removed a critical pillar of support for Sterling.
With GBP investors having digested the Bank of England’s (BoE) latest policy statement, the focus swiftly returned to the UK’s impending vaccine shortage as it stoked fears the UK’s reopening plans could be delayed.
Looking to the week ahead, it looks to be a busy session for GBP investors who face a glut of UK data releases, the first of which will be the UK’s latest jobs report. Will another rise in the unemployment rate dent the Pound in the first half of the week?
Euro (EUR) Undermined by USD Strength
The Euro fell back on Friday as the single currency’s negative correlation with the US Dollar (USD) left it to flounder as the latter strengthened.
Adding to the downward pressure on the single currency were fears over a third wave of coronavirus infections breaking out in Europe after German Health Minister Jens Spahn warned that vaccine supplies aren’t high enough to prevent infections from surging again.
Coming up, we could see the Euro continue to struggle this week if Europe’s coronavirus situation continues to deteriorate and we see more of the Eurozone begin to contemplate new lockdowns.
US Dollar (USD) Rallies on Surging Yields
The US Dollar ended later week’s session on a high, with the currency once again rising in step with another pick up in US Treasury yields.
Accentuating these gains were concerns over renewed tensions between the US and China after the two superpowers clashed at high-level talks in Alaska on Thursday evening.
Turning to this week, we are likely to see the US Dollar maintain its upward trajectory so long as yields continue to strengthen.
Canadian Dollar (CAD) Weakens Following Slump in Retail Sales
The Canadian Dollar ticked lower on Friday, as the appeal of the ‘Loonie’ was dented by both a second consecutive slump in domestic retail sales growth in January, and a drop in oil prices as WTI crude retreated below $60 a barrel.
Australian Dollar (AUD) Dented by Coronavirus Fears
The Australian Dollar is off to a weak start so far this week, with the appeal of the risk-sensitive ‘Aussie’ taking a knock amidst fears over another coronavirus resurgence in Europe and other parts of the world.
New Zealand Dollar (NZD) Weakens in Risk-Off Trade
The New Zealand Dollar also opens this week on the defensive as limited risk appetite sees investors shy away from the high-yield ‘Kiwi’.
Data Releases
14:00 USD Existing Home Sales (Feb)