Daily Currency Update

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Pound remains resilient despite continued new virus cases

GBP - British Pound

The pound is seemingly flying in the face of the new lockdown, which came into affect last night, as well as the continued rise in virus cases. Covid cases topped 60,000 for the first time on Tuesday, although it is expected that numbers were almost double this before the first lockdown last March. Alarmingly 1 in 50 people in the UK is now thought to be positive, whilst the number is worse for London where it is 1 in 30. Despite this though Sterling managed to claw out gains yesterday against the US Dollar. The Bank of England though is under pressure to announce more easing in the face of the expected market slowdown. Net GBP positions amongst investors however remain marginally positive for the time being pointing towards further Sterling appreciation.

Key Movers

The run off elections in Georgia is going down to the wire, critical in deciding who controls the US Senate for the next two years. At the time of writing Raphael Warnock (D) has ousted Kelly Loeffler (R) in one race to become the state's first black Senator. The second race is still ongoing. A Democratic White House, Congress and Senate could see near term fiscal spending greatly increase with one off payments to all Americans rise to $2000 vs $600 as one example. This potential Democratic clean sweep is part of the story behind the US Dollar weakening at the moment.

Closer to home we have had the final confirmation of December Eurozone Services PMIs which were slightly downgraded. However, all of December's PMI surveys were conducted before the more contagious virus strain was announced so we could see big differences in the December vs January numbers. Remember later this evening we have the Fed minutes but before that Andrew Bailey (Governor of the Bank of England) is speaking which will be one to look out for.

Expected Ranges

GBP/USD: 1.3540 - 1.3670 ▲

GBP/EUR: 1.1045 - 1.1090 ▼

GBP/AUD: 1.7400 - 1.7560 ▼

EUR/USD: 1.2280 - 1.2345 ▲