- Posted by currencies in Brexit, coronavirus, Dollar, EUR, GBP, Sterling, UK, Uncategorised
- January 25, 2021
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Last week we saw some strength in Sterling exchange rates with GBPEUR hitting 1.13 and GBPUSD hitting 1.3750 before pulling back at the end of the week. It seems that the “Vaccine trade” is in full force and with the UK’s so far fantastic rollout of the vaccine, there seems to be a lot of confidence that the UK could be in for a great economic rebound later in the year.
The main risk at the moment is the other Covid variants- Now this is where my knowledge is extremely limited as I am no scientist and would prefer not to give an opinion on something I don’t know about- all I can see is that Governments around the world are concerned about it and are not getting their hopes up too much about coming out of restrictions just yet- my only hope is that this is something the vaccine can still help solve and isn’t something that causes new problems down the road.
Across the pond- President Joe Biden is now officially in office and has wasted no time in getting to business- their vaccine rollout will be steaming ahead soon, and he is undoing some of President Trumps decisions such as the Paris Agreement and stopping funding to the WHO. President Biden and PM Boris Johnson also had a call over the weekend, the main thing I took from this is that in the Presidents notes- there was no talk of a trade deal between the UK & U.S- not something for us to be concerned about right now, as there is an ongoing pandemic and I am sure that is President Biden’s priority- but at the same time I think it does indicate that he will be focussed on a route into Europe through Ireland, as opposed to prioritising a trade deal with the UK
As it stands- it seems much of the world is now in a form of restrictions and lockdowns- but at the same time investors seem bullish in markets. If we continue to see a Risk on approach, then GBPUSD will have legs to continue- GBPEUR is unfortunately held back by understandably weak UK data and a less bearish ECB. For now, it seems GBPEUR may be consolidating but I am waiting to see further evidence of this over the week.