Home Daily Commentaries The US Dollar stronger as we start 2023

The US Dollar stronger as we start 2023

Tuesday 3 January, 2023

Daily Currency Update

This morning has seen GBP/USD drop to its lowest level since late November as concerns about the spread of Covid in China see investors seek the safety of the US dollar. The pound is also being hindered by yet more strikes on the railways which are due to last all week making commuting impossible for many and impacting business's that depend on trade from workers travelling to and from work. As well as railway workers, teachers, nurses and and other sectors are also facing industrial action as unions battle for a pay rise for its members in the face of decades high inflation. There is little economic data from the UK this week so developments over strikes as well as other external factors will likely guide the pounds value. GBP/USD is currently around 1.1915 with GBP/EUR back under 1.13.

Key Movers

China's abandonment of its zero-Covid policy is causing concern to investors as the country sees a huge surge in cases that threaten to overwhelm its health system. The dramatic abandonment of the strict rules that Chinese citizens were living under in the middle of winter has seen some modeling showing that up to 800m Chinese could catch the virus in the next three months. The latest Manufacturing data from China released this morning missed the target coming in at 49 its fifth sub-50 print which divides expansion and contraction in the sector. Away from China, the main data due this week comes from the US with tomorrow seeing the latest Manufacturing PMI as well as the release of the minutes from the last meeting of the Federal Reserve. Friday sees December’s jobs numbers with the Non-Farm Payrolls release predicted to show 200k were added to the workforce last month. EUR/USD is at 1.0550.

Expected Ranges

  • GBP/USD: 1.1905 - 1.2035 ▼
  • GBP/EUR: 1.1260 - 1.1370 ▼
  • GBP/AUD: 1.7650 - 1.7840 ▲
  • EUR/USD: 1.0500 - 1.0650 ▼