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GBP/EUR bolstered by UK vaccination optimism

currency-newsGBP/EUR bolstered by UK vaccination optimism
The pound strengthened on Friday as GBP investors welcomed the news that the UK had approved another coronavirus vaccine.
 
However, Sterling is struggling to consolidate these gains at the start of this week, with GBP/EUR dipping to €1.1073 and GBP/USD slumping to $1.3496. GBP/CAD is muted at C$1.7206, while GBP/AUD and GBP/NZD hold steady at AU$1.7493 and NZ$1.8754, respectively.
 
Looking to the week ahead, we are likely to see coronavirus developments act as a key catalyst of currency movement.
 

What’s been happening?

The pound ticked higher at the end of last week’s session, as Sterling sentiment was cheered by news that the Moderna coronavirus vaccine had also been approved to use in the UK.
 
This helped to offset the news that a 'major incident’ had been declared in London due to a worrying surge in coronavirus infections in the capital.
 
The US dollar, meanwhile, came under heavy selling pressure immediately after the publication of last month’s US payroll figures following a shock contraction in employment growth. But these losses didn’t last for long as jittery investors ensured demand for the safe-haven currency remained robust.
 
At the same time, the euro was on the defensive throughout Friday's trading session, amidst concerns over rising coronavirus cases in many parts of Europe, as well as the slow pace of vaccinations in the EU.
 
These concerns saw EUR investors largely ignore some positive data releases from the Eurozone at the end of last week.
 

What’s coming up?

Turning to this week’s session, we could see more coronavirus driven uncertainty stoke volatility in the currency market.
 
This is likely to be particularly true for the pound, which could face headwinds amidst concerns over the recent surge in coronavirus cases across the UK and how this could result in a prolonged lockdown in parts of the country.
 
On the other side of the Channel, the spotlight is likely to be on Germany’s upcoming budget, with EUR investors eager to see how generous the Germany government will be with its fiscal stimulus this year.
 
Meanwhile, USD investors are likely to be focused on the latest US consumer price index as well as the situation in Washington, amidst reports Democrats will seek to impeach Donald Trump following last week’s riots at the Capitol.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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