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GBP/USD holds at $1.36 ahead of Biden’s inauguration

currency-newsGBP/USD holds at $1.36 ahead of Biden’s inauguration
A lack of notable data releases resulted in limited currency movement at the start of this week, particularly as investors brace for some key events later in the session.
This trend looks to persist this morning as the pound struggles for momentum, with GBP/EUR subdued at €1.1226 and GBP/USD flat at $1.3603. GBP/CAD is rangebound at C$1.7307, while GBP/AUD and GBP/NZD hold steady at AU$1.7623 and NZ$1.9062, respectively.
Coming up, the focus this morning looks to be on the latest ZEW surveys. Will an improvement in Eurozone economic sentiment help to buoy the euro today?

What’s been happening?

The pound was mostly muted at the start of this week’s session as GBP investors remained focused on the UK’s coronavirus situation in the absence of any notable data.
This resulted in Sterling remaining rangebound yesterday as concerns over the economic impact of England’s lockdown was dampened by optimism over the blistering pace of the UK’s vaccine rollout.
The euro also struggled to find direction on Monday as European political developments made for some mixed reading.
This saw concerns that Italy’s government might be under threat of collapse offset by news that Armin Laschet, a moderate, will succeed Angela Merkel as the next leader of the CDU party, potentially ensuring that Merkel’s economic legacy will be preserved should he be able to form a government following September’s national election.
At the same time, in spite of thin trading condition as US markets closed for MLK day, the US dollar found some modest gains yesterday, supported by a cautious market mood as ongoing concerns over the global coronavirus situation overshadowed a positive GDP release from China.

What’s coming up?

Looking ahead, the spotlight this morning will likely be on the latest ZEW surveys from the Eurozone.
January’s surveys are forecast to report a modest improvement in economic sentiment in the bloc, which may help to boost the euro.
However, in light of Europe’s gloomy coronavirus situation and the extension of lockdown measures in countries such as Germany, there remains a risk of sentiment deteriorating and weakening the single currency as a result.
In the UK, the focus is likely to remain on the country’s fight against the coronavirus, with a continued fall in cases potentially lending some support to the pound.
Finally, with US data releases still thin on the ground today, the focus for USD investors is likely to be on Joe Biden’s inauguration on Wednesday and what his policy plans could mean for the US economy.
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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