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Market Update

• Posted by currencies in Brexit, coronavirus, EUR, Fed, GBP, Prime Minister, Sterling, UK, Uncategorised
• January 21, 2021
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Sterling has continued its climb against both EUR & USD over the past 48 hours due mainly to December Inflation figures beating expectations for both Yearly & Monthly figures. The main contributors behind the inflation numbers rising were increases in costs of Transport and computer game consoles.

Projections for inflation figures through the early parts of 2021 see a steady gradual climb, with the effects of Brexit & Covid-19 causing cash-strapped businesses to raise prices for the consumer.

Another positive note for GBP is the current success of the vaccination roll out in the UK. So far, 4.6m people in The UK have had the Covid-19 vaccine bringing optimism to the markets that the Mid-February target of vaccinating 15m of the most vulnerable will allow for a steady relaxation of the restrictions, therefore gradually opening other parts of the economy such as non-essential retail and hospitality.

The Euro has begun to come under some pressure over the last few days with panic setting in over plans for an economic support package of €1.8trillion to help the 27 member states bounce back from the financial impacts Covid-19 has caused.

Since the pandemic hit in the first quarter of 2020, thousands of jobs have been lost and many businesses and economies have been shut for several months putting pressure on The Euro. Initial plans indicate the final proposals from each member state must be submitted by the end of April to allow scrutiny and to then be implemented for the second half of the year, however more than half of the 27 member states have yet to submit their plans for spending due to concerns over The EU’s plans on distribution of the package.

Joe Biden was officially sworn in as the 46^th President of The United States yesterday, and top of his agenda seems to be the proposal of a $1.9 trillion Covid-Relief Bill. This is seen as a plan that needs to be introduced sooner rather than later, with economists keen to point out that upwards of One Million new people are expected to be claiming for jobless benefits, whilst over 5 million people are continuing to claim for these benefits. These figures combined with disheartening jobs report in December should only help to convince lawmakers to pass Biden’s proposal.