Daily Currency Update

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Government ministers warn of tough times.

GBP - British pound

UK Government ministers have continued to warn of the severity of the second wave, and the potential impact it may have on the economy moving forward. UK Chief Medical Adviser has stated that the next few weeks will be the worse and that stricter regulations may have to come into play in February, to offset the virus further. Sunak spoke similarly, and claimed the UK economy must first get worse, before improving. He also praised the City and its workers and suggested it will once again start booming once the virus has been eradicated. Comments like this have hurt GBP in the past, however on this occasion, these have been ignored the pound is up over 1% since yesterday’s lows.

Key Movers

The US dollar extended its gains against all of the major currencies. Despite the first month of job losses in April, the uptick in manufacturing and service sector activity combined with the jump in wages last month renewed demand for US dollars. 10-year treasury yields are up, suggesting investors believe the economy will certainly bounce back faster than the US Federal Reserve are letting on. With a new stimulus package rumoured to be in the pipeline, this US dollar surge could continue throughout January.

The sell-off in the euro has come about from tighter restrictions and an uptick in cases. Germany has declared much tougher restrictions, whilst other countries are projected to follow suit. A euro sell-off is entirely possible over the next few weeks, as the tighter restrictions take their toll economically.

Expected Ranges

GBP/USD: 1.3500-1.3705 ▲

GBP/EUR: 1.1120-1.1315 ▲

GBP/CAD: 1.7270-1.7410 ▲

GBP/AUD: 1.7500-1.7655 ▲