Daily Currency Update

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Market buoyed further by vaccine hopes

GBP - British Pound

This morning has seen the pound buoyed and taken relief from a number of areas, notably that the Prime Minister Boris Johnson is set to intervene in Brexit talks and provide focus to the negotiations. On top of this, we have also had the preliminary results of the vaccine from AstraZeneca and the University of Oxford which is hugely significant because it accounts for 40% of the supply of vaccine orders to low and middle income countries worldwide.

This news alongside further COVID 19 related headlines has seen a further shift in risk appetite for the market with Asian stocks up, whilst the US dollar is on the back foot. Indeed, it is the performance of the US dollar at the moment which is adding further strength towards GBPUSD which now has its eyes on the recent highs seen at the start of September (1.3475+).

So this week could certainly be a pivotal one for the pound with Brexit talks to watch out for as they approach crunch time, the Prime Minister announcing the next steps of lockdown/tiered system and the usual PMIs providing the latest monthly insight as to the state of the UK services sector in particular. There are also Monetary Policy Report hearings this afternoon in Parliament, so the Bank of England will be in the spotlight again.

Key Movers

For the Euro the story is somewhat similar as the pound this week with a focus on Brexit talks and PMIs and the impact that lockdown measures have had on the manufacturing sector. Recently we have seen a weakening of domestic demand across Europe and EUR/USD has traded between the top of 1.18 and 1.16 for the last eight weeks or so. Any unexpected positive PMIs news (unlikely) or further USD weakness due to shifting risk appetite (more likely) could see the pair test 1st September highs of circa 1.20.

Incumbent President, Donald Trump’s grip on the White House suffered further setbacks over the weekend with a judge in Pennsylvania dismissing a lawsuit that aimed to invalidate millions of mail in ballots in the state. Somehow the President’s lawyer Rudy Giuliani spun this into positive news for the President by saying in a statement that this was welcome as it helps ‘in our strategy to get expeditiously to the Supreme Court’. The fact that Joe Biden’s victory is all but secured has seen a relief for markets worldwide and plays into the wider story of current US Dollar weakness. Out of the US at the weekend there was also fresh hope for riskier trading with a double COVID 19 headline. Firstly the FDA could approve Pfizer’s vaccine on 10th December and secondly that Regeneron’s antibody treatment for mild to moderate cases has been given the full go ahead by the agency. Good news for market, less so for the USD.

Expected Ranges

GBP/USD: 1.3280 - 1.3400 ▲

GBP/EUR: 1.1150 - 1.1285 ▲

GBP/AUD: 1.8150 - 1.8260 ▲

EUR/USD: 1.1820 - 1.1900 ▲