Sterling gains despite local data releases
Wednesday 27 January, 2021
Daily Currency UpdateOne piece of economic data released yesterday was UK CBI realised sales at 11am. Anything above 0 indicates growth, so the -50 showed a sharp contraction and is considerably lower than the -3 previously released. It comes as no surprise however as lockdown was implemented halfway through the survey period. Sterling started yesterday on the backfoot, falling to 1.3612 versus the US dollar and 1.1231 against the euro, but recovered against these lows over the day. The above CBI realised sales and Boris Johnson’s COVID update both provided stumbling blocks for the pound’s gains but didn't deter it from maintaining its upward movement. We open around GBPUSD 1.3730 and GBPEUR 1.1330.
Key MoversThe US had its monthly consumer confidence survey yesterday, which beat expectations coming in at 89.3. This release continues the recent string of positive data releases from the US and has supported the risk-on mood. This week’s main macroeconomic event comes from the US tonight where we await the FOMC interest rate decision. All eyes will be firmly on whether we will see a tapering of asset purchases and, if so, what date this will commence. It is unlikely that we will get any soundbites on the subject given that the vaccine rollout has just begun, the last non-farm payroll report posted a negative number, and we are due a contraction in Q4. Either way, it is worth noting for potential volatility for the US dollar. EUR/USD still continues to trade within a narrow margin – between 1.2100 and 1.2160. The USD has lost ground against the GBP and other riskier assets, such as the AUD.
- GBP/USD: 1.3690 - 1.3770 ▲
- GBP/EUR: 1.1280 - 1.1380 ▲
- EUR/USD: 1.2100 - 1.2180 ▲
- GBP/AUD: 1.7660 - 1.7840 ▲