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Political woes weigh on Sterling

Monday 20 December, 2021

Daily Currency Update

Uncertainty is weighing heavily on Sterling at the start of this week as covid-19 cases hit record highs and ministers are unable to rule out potential new measures prior to Christmas. GBPUSD has traded back towards the $1.32 handle, with GBPEUR trading towards €1.17. In essence, Sterling has lost all its gains that were made post the Bank of England’s decision to raise interest rates to 0.25% last week. Political uncertainty is also weighing on Sterling. There have been a number of stories in recent weeks that appear to suggest the Government were not following Covid restrictions last year. In the most recent scandal, in a photo published the Guardian, it appears to show the Prime Minister with a number of colleagues and his wife, eating cheese and wine in the garden.

Key Movers

With the run up to Christmas, we have a very quiet week for economic data releases, however, we could see volatility as the market becomes less liquid. The Dollar has been on the front foot since the back end of last week, with EURUSD dropping nearly 100 pips since Friday morning.

Expected Ranges

  • GBP/USD: 1.3130 - 1.3250 ▼
  • GBP/EUR: 1.1650 - 1.1750 ▼
  • GBP/AUD: 1.8510 - 1.8650 ▼
  • EUR/USD: 1.12 - 1.13 ▼