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GBP/USD nears $1.37 despite UK coronavirus concerns

currency-newsGBP/USD nears $1.37 despite UK coronavirus concerns
The pound struck higher on Thursday, buoyed by relief that the UK wasn’t to face a no-deal Brexit in 2021.
 
However, Sterling is struggling for support at the start of this week, with GBP/EUR sliding to €1.1151 and GBP/USD rangebound at $1.3685. GBP/CAD is flat at C$1.7379, while GBP/AUD and GBP/NZD hold steady at AU$1.7721 and NZ$1.8983, respectively.
 
Looking ahead, we may see GBP exchange rates remain subdued today, amidst growing speculation that the UK faces another national lockdown.
 

What’s been happening?

The pound climbed higher during the final day of trade last year, with the positive move in Sterling supported by optimism after the UK-EU Brexit trade deal agreement passed the previous day.
 
The euro, meanwhile, faced some selling pressure on Thursday, driven by thin trading conditions in year-end trade, as well as the single currency’s recent strong performance having struck a new 32-month high against the US dollar the day before.
 
Finally, we witnessed a slight correction in the US dollar at the end of 2020 after experiencing significant selling pressure in recent weeks, while the rebound in the US currency was also supported by a drop in new unemployment claims over the Christmas week.
 

What’s coming up?

Turning to today’s session, the publication of the UK and Eurozone’s latest manufacturing PMI releases are likely to be a key focus for GBP and EUR investors first thing this morning.
 
Given how early December’s preliminary figures were published due to the holiday period, the chances for discrepancies in the finalised releases are greater, with the potential for weaker-than-expected factory activity in the UK or Eurozone likely to drag on their respective currency.
 
Also influencing the pound this morning will be the speculation over even tougher coronavirus restrictions in the UK, with Boris Johnson under considerable pressure to enact a new national lockdown.
 
Meanwhile in the US, the focus will be on the upcoming run-off elections in Georgia, where a clear win for the Democrat representatives would give the Biden administration control of the Senate and make it easier for the incoming president to implement more stimulus measures, potentially to the detriment of the US dollar.
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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