The US dollar fell sharply on Monday as risk-on trade and falling US Treasury yields weighed heavily on the safe-haven currency.
The announcement that both Scotland and England are returning to a state of national lockdown added to the weakness of GBP exchange rates.
With the UK economy already showing fresh signs of slowing over the course of the fourth quarter, thanks to ongoing restrictions, the prospect of further disruption weighed heavily on the pound.
As the service sector looks set to experience another weak month in January thanks to the lockdown, the odds of a first quarter economic recovery diminished.
Confirmation that the services PMI remained in a state of contraction last month could see the pound trending lower across the board on Wednesday.
Even if the release of December’s construction PMI points towards resilience within the sector, this is unlikely to offer GBP exchange rates any particular support.
With Covid-19 concerns looking set to dominate the domestic outlook in the near future, the potential for a pound rally appears limited.
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)