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UK rolls out new vaccine as markets start the year

GBP - British Pound

The new year in many ways looks similar to December 2020 with just a few differences. We start with the rollout of the Oxford/Astrazeneca jab to people in the UK but also the report that the whole of England is set to be plunged into further restrictions. The UK is not alone in its surge of fresh virus cases with the US, Europe and Japan all suffering. However, markets and indices have jumped on the first full day of trading with some Asian indices at all time highs. So what's the main difference from the end of last year. Well, from a UK perspective the recently agreed UK/EU trade deal means that the biggest risk factor/uncertainty/nightmare is finally in the rear view mirror and the Pound is certainly taking advantage of this. Despite slipping oddly on the breaking of the news on Christmas Eve, GBP/USD now finds itself at the rather giddy heights of 1.36+. GBP/EUR is also surging but its gains are slightly more modest and will remain to be so given the superb strength of the Euro at the moment (EUR/USD 1.22+). So what can we expect from this year? Well three things come to mind. Firstly, we could finally see a return towards markets trading on data and less on Brexit news and President Trump worries. Secondly, there will be a key focus, particularly at the start of the year, on the vaccine rollout across the world. There are already reports that the European Commission is struggling with the rollout. Finally, the key question for all currencies will be what happens to the US Dollar and will it be able to bounce back? The US Dollar saw its worst performance last year since 2017 and further virus cases alongside rock bottom interest rates could make it a difficult 2021 for the greenback.

Key Movers

Speaking of the US, there is still the small item of the Georgia Senate run off race to decide. This will be very significant as it will shape to outlook of the US Senate for the next few years and will decide if President elect Biden has control over the three main bodies of government.

In terms of data (which will be important this year) we have Fed minutes on Wednesday alongside Bank of England Governor Bailey speaking, then on Friday we get the latest on Canadian and US employment numbers.

Expected Ranges

GBP/USD: 1.3650 - 1.3700 ▲

GBP/EUR: 1.1100 1.1180 ▼

GBP/AUD: 1.7680 - 1.7790 ▼

EUR/USD: 1.2200 - 1.2290 ▲