GBP - British pound
UK news continues to be dominated by coronavirus developments as the vaccination programme looks set to be ramped up across the country. People over 70 and those classed as extremely clinically vulnerable will start to be given a jab from today. The roll out to wider sections of the community comes as ten new mass vaccination centres are opened across England, in addition to the seven that were opened earlier in the month in an effort to fight the pandemic, which has now claimed nearly 90,000 lives.
The number of infections looks like it is starting to fall as the impact of lockdown starts to have an impact. The rolling seven-day average across the UK now stands at just over 46,000, however we should expect high death rates for the rest of the month as the NHS enters what is likely to be the peak of hospitalisations before things hopefully start to improve as we near February.
From the pounds perspective it seems investors are looking at the medium to longer term picture rather than the current situation as it continues to gain against the euro and holds steady against the dollar. Recent comments from Bank of England Governor Andrew Bailey seemed to suggest UK interest rates will not be going negative as well as better than expected growth data for November added support to sterling last week too. GBP/USD is down a little as the dollar starts the week on the front foot with it hovering around the 1.3550 handle. GBP/EUR trades around 1.1210
The US is enjoying an extended weekend on the back of the Martin Luther King bank holiday. Although it is a quiet start to the week from the States, the worlds focus will turn to Washington on Wednesday with Joe Biden set to be inaugurated as the 46th president of the US at 5pm GMT. Incumbent Donald Trump has stated (in his last tweet before his Twitter account was closed) that he will not be attending the handover, the first president in over 150 years to shun his successors swearing in. The dollar has started the week on the front foot this morning with it higher against most currencies as stock markets around the world open up with slight losses, adding to a sense of caution ahead of Wednesdays ceremony. On the back of the violent scenes we saw earlier this month, where Trump supporters stormed Congress in an effort to thwart the rubber stamping of Biden's victory, the US is on high alert. Especially in Washington where tens of thousands of troops and National Guard have been deployed to ensure there is no further violence in the capital.
Away from America there has been positive news out from China as 2020 fourth quarter GDP hit 6.5% up from Q3's 4.9% and better than the 6.2% that had been expected. China's economy is now expanding at pre-Covid levels which should help support the Aussie and Kiwi dollars going forward.
In Europe, Germany's Christian Democrat party has elected Armin Laschet to take over as leader, putting him in prime position to succeed Angela Merkel as Chancellor in September’s general election. Although the front runner, he is not guaranteed the top job as German governments are normally formed of a coalition and contenders from other factions of the current government may state their intent to lead in the coming weeks/months.
Looking to later this week there is plenty of news from the Eurozone with Thursday seeing the European Central Bank’s interest rate decision with no change in rates expected. However discussions over the expansion of other monetary policy tools are likely to be the main area of focus. We also have PMI data from across the bloc on Friday which will give us an idea of how Europe is holding up as it fights the pandemic. EUR/USD has retreated over recent weeks with it now back under 1.21.
1.35 - 1.3680 ▼GBP/EUR:
1.1180 - 1.1280 ▼GBP/AUD:
1.7580 - 1.77 ▲GBP/NZD:
1.8960 - 1.9080 ▲GBP/CAD:
1.7280 - 1.7390 ▲