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GBP consolidates gains

GBP - British Pound

The Great British pound outperformed its peers on early Wednesday trading, extending beyond 1.3850 and marking fresh two-year highs at 1.3865. However, a dip in financial markets in the north American sessions blunted the British pound's advance against the euro. The UK currency nevertheless remains well supported against nearly all its peers in the short-term and retains its position as 2021's top performing G10 currency.

Broader market sentiment is not the only game in town for the pound as analysts say the currency is also finding support from the country's rapid vaccine rollout and the dawning realisation that the Bank of England will not cut interest rates into negative territory in the foreseeable future.

Key Movers

The greenback continued to shed ground against most major rivals, resulting in EUR/USD reaching a fresh weekly high of 1.2143. Poor US inflation maintained the pressure throughout the American session, with the pair ending the day in the 1.2130 region. US January annual inflation came in at 1.4%, matching the preliminary estimate but below the expected 1.5%. Earlier in the day, Germany published its own January CPI data, which matched the preliminary estimates.

Over in Europe there was a lack of data to drive markets. Germany have decided to extend their lockdown to March 7th. German chancellor Angela Merkel and the country’s 16 governors decided Wednesday to largely extend the country’s lockdown amid concerns that new virus variants could reverse a decline in new confirmed cases.

In terms of data releases due today, the only real data of note is US unemployment claims for the past week. With 4 out of the last 5 prints coming in better than expected, we could see market confidence bolstered if the numbers continue to improve.

Expected Ranges

GBP/USD: 1.38 - 1.3875 ▼

GBP/EUR: 1.1375 - 1.1450 ▼

GBP/AUD: 1.78 - 1.7950 ▲

GBP/NZD: 1.9050 - 1.92 ▼

GBP/CAD: 1.7485 - 1.585 ▼