GBP - British pound
The positive tone that the pound started the year with was lost yesterday afternoon as rumours of Boris Johnson announcing fresh lockdown measures circulated. It was a tumultuous affair for the pound with it dropping around 1% against the USD and 1.6% against the euro. Despite this though, data out from the UK was positive and will be very important over the next few months. Firstly, UK Manufacturing PMIs beat expectations and reaching highs not seen since November 2017 as factories rushed orders in December in the fear of a No Deal Brexit. On top of this mortgage approvals for November reached 105,000, the highest figure for that month since the GFC. The big question for this quarter is whether a sufficient rollout of the vaccine can support any economic recovery and if that's the case can we see GBPUSD return to its glory days of c. 1.40?
Looking towards Europe, the vaccine rollout has been somewhat muted however the data and gains from the euro tell a different story. If the US dollar struggled last year, the euro is partly to blame. Yesterday we saw Eurozone manufacturing activity, a sector critical to the continent, expand at its fastest rate since May 2018 and the euro followed suit. GBP/EUR sold off throughout the day but the euro also surged against the US dollar.
Speaking of the US, today we have the critical Georgia Senate election run off which will determine whether the Democrats and Joe Biden hold the three main offices of government. The polls point slightly towards the Democrats at the moment but Democrat voters tend not to turn up in the state during run off elections. If the Democrats win then expect a more aggressive policy agenda.
1.3540 - 1.3600 ▼GBP/EUR:
1.1050 - 1.1180 ▼GBP/AUD:
1.7430 - 1.7600 ▼EUR/USD:
1.2250 - 1.2300 ▲