Daily Currency Update

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Markets unfazed by chaos in Washington

USD - United States dollar

For the first time in a decade the US Democrats will hold the White House, Congress and Senate finalising the 'Blue Wave' that had been talked about during the election last November. This was a result of Democrats winning the two run off elections for the Senate seats in Georgia leaving the Senate tied 50 members a piece - Vice President elect Harris will have the casting vote in any deadlock granting the Democrats a de facto majority in the house. This news however was all marred by scenes of violence that unfolded on the steps and within the US Capitol building where both incumbent houses were meeting to ceremonially ratify the result of the electoral college votes. As mentioned though, despite this, markets remain unfazed and if anything buoyed at the prospect of the 'Blue' clean sweep. The reason for this is that this opens the gateway for Biden to pass greater fiscal stimulus in the short term with the prospect of higher taxes not fazing investors (for the time being). We have seen Asian and US equities pick up, whilst the US dollar struggled in the face of the high beta currencies of the Aussie and New Zealand dollar. As long as risk sentiment remains positive these commodities could do well against the US dollar.

Key Movers

Closer to home it was another rollercoaster day for the pound as it swung between close to GBP/USD 1.37 and the mid 1.35s. This was on a day when the UK reported over 1,000 virus deaths for the first time since early last year. Meanwhile the Bank of England is set to soon release its publication on the viability of negative interest rates in the UK - a move which would dampen any prospects for the pound.

Finally, over in Europe the European Medicines Agency has approved the use of the Moderna vaccine to be rolled out across Europe. Whilst this is great news for Europe as it starts its vaccine programme the high cost of this particular vaccine has seen the lowest number of orders taken as a result.

Expected Ranges

GBP/USD: 1.3540 - 1.3680 ▲

GBP/EUR: 1.1000 - 1.1090 ▲

GBP/AUD: 1.7415 - 1.7650 ▲

EUR/USD: 1.2240 - 1.2350 ▼