Daily Currency Update

GBP - British pound

It was another mixed day for the pound yesterday as it has continued its week with the shine being taken off the currency following the announcement of a UK/EU Brexit trade deal. Sterling hasn't found the legs to break above GBPUSD 1.3650 let alone make another go at GBPUSD 1.37+. So what is weighing on the currency at the moment? Ultimately there is more and more fervour about the Bank of England cutting interest rates to below zero, particularly with the fresh lockdown the UK is now in. Some forecasters are predicting that this may come as soon as February.
This is all despite the fact that investors are in fact positive about the pound and hold net long positions because of the trade deal that the UK now has. The biggest benefit for Sterling this year is that the Brexit risk headwind has been removed.

Key Movers

The focus for most markets today will be the first Non Farms Payroll figure out of the US for the year. With the US dollar bouncing off near three year lows yesterday it is a crucial day for the largest currency. The outlook though for the jobs report doesn't look great with investors expecting the worst number in seven months with less than 100k jobs being added. This is due to the fact that many states including California re-introduced restrictions in December to combat rising infection cases.

Meanwhile across the waters in Germany this morning industrial production figures released have added to hopes that the country will avoid a double dip recession. Industrial production is a crucial facet of economic output in the country and has shrunk by only 2.6% for the year. The euro is struggling in the last 24 hours despite this but perhaps Germany's forthcoming GDP estimate could stem the loses.

Expected Ranges