Sterling gains tempered by profit taking
Thursday 25 February, 2021
Daily Currency UpdateThere is no doubt about it, the pound is absolutely flying at the moment and continues to remain one of the top performing G10 currencies of the year. Yesterday though investors perhaps took stock of their returns with some profit-taking, meaning that the pound's advance was stopped for at least one day. Despite this however the pound still remains very optimistic on the UK's vaccine rollout programme and is also benefitting from a shift back towards risk in the market. Just looking at the Swiss franc and Japanese yen is evidence enough of how investors are feeling. Supposedly it should be a quiet few days for the pound to the end of the week with no data to report but it doesn't really work like that anymore. Instead watch out for more vaccine news as well as GBP/USD testing 1.4200 and GBP/EUR making a beeline for 1.1700.
Key MoversThe US dollar performed admirably yesterday putting in a Michael Carrick-esq performance as it recovered some ground against the pound (as mentioned) as well as the euro. EUR/USD dropped back towards 1.2100 in the afternoon. For the second day in a row, Federal Reserve Chair Jerome Powell reiterated that interest rates were not moving upwards for three years. This led to strong moves in the equity markets with the Dow Jones closing at record highs with investors happy that low and accommodating rates means cheap borrowing that they can pump into buying equities. There's a raft of Fed members speaking later on but they are likely to tow the party line and reiterate the message from Powell but Durable Goods Orders could point towards more US recovery.
- GBP/USD: 1.4120 - 1.4200 ▲
- GBP/EUR: 1.1600 - 1.1680 ▼
- GBP/AUD: 1.7700 - 1.7940 ▼
- EUR/USD: 1.2160 - 1.2200 ▲