GBP - British Pound
The pound continues to be buoyed by the pace of the UK's Covid-19 vaccine rollout as well as encouraging news about the infection rate continuing to drop. The latest figures released yesterday showed new positive cases had fallen to 16,840 its lowest daily total since December and well below the peak we saw in early January when over 60k were shown to have tested positive in a single day.
The main area of focus for pound crosses is GBP/EUR with sterling making several plays to break above 1.1363 (which represents 0.88 for EUR/GBP) with strong resistance being shown at this key level. Should the UK's programme continue to accelerate then we will be through the worst of the pandemic sooner rather than later which will be good for economic growth from Q2 onwards which could feed through to further pound strength.
The mortality rate continues to remain high however it appears to have plateaued and should hopefully start to fall as we head deeper into February relieving pressure on an NHS that is creaking under the pressure. There was sad news yesterday when it was announced that Captain Sir Tom Moore had died after contracting Coronavirus at the age of 100. The 2nd World War veteran raised nearly £33m for the NHS by walking lengths of his garden in an effort that made headlines around the world and made him a national treasure at the same time.
GBP/EUR trades at 1.1355 with GBP/USD at 1.3670
Those betting on continued euro strength throughout 2021 will likely be feeling a little nervous at present as the bloc's lacklustre vaccination programme sees it fall further behind the UK and the US with regards to the percentage of people receiving a jab. EUR/USD approached the key 1.20 handle yesterday however retreated to 1.2050 but is making another play towards the big number this morning. A break below 1.20 will likely send GBP/EUR towards the 1.14 handle as the "vaccine trade" becomes a key area of focus.
News emanating from Italy that former European Central Bank chief, Mario Draghi may become the next Prime Minister has added to the risk on tone in financial markets this morning with all major European stock markets opening in the green. The man credited with saving the euro during the worst of the Greek debt crisis in 2012 when he famously said he was "ready to do whatever it takes" to save the single currency is seen as a safe pair of hands and should add confidence to investors especially in the Italian bond market.
Data-wise the main events are due from the States this afternoon with ADP Non-Farm Employment figures due at 1:15pm which is followed at 3pm by the ISM Services PMI. Should both exceed expectations then we could see EUR/USD break below 1.20 however many investors may be waiting for Friday’s jobs data from America before repositioning. EUR/USD trades at 1.2015 with USD/JPY back above 105.
1.36 - 1.3740 ▼GBP/EUR:
1.1290 - 1.14 ▲GBP/AUD:
1.7845 - 1.8010 ▼GBP/NZD:
1.8915 - 1.91 ▼GBP/CAD:
1.7380 - 1.7530 ▼