IFX Market Report: Monday 15th March 2021

The British Pound fell on Friday as the Office for National Statistics reported that UK goods exports fell 40.7% in January following the Brexit transition. With imports also dropping to 28.8%, these declines are the largest since comparable records began in 1997. The Financial Times noted that “there were no similar falls in Britain’s trade with non-EU countries, showing the move to be related to Brexit controls rather than the effects of the coronavirus surge and January’s lockdown”. The PM’s lead advisor on Europe David Frost responded to the ONS statistics by claiming stockpiling and other factors lead to companies having “less need to move goods in January”. He also claimed COVID-19 lockdowns contributed to the “reduced demand”. Trade groups have rejected these claims stating that were “fundamental problems” with new trade barriers that are “real and costly”.

GBPUSD started the Friday session at 1.3954 and came under heavy selling pressure as Dollar demand increased, closing at 1.3895.

GBPEUR also lost ground on Friday – opening at 1.1677 and closing at 1.1639. Despite depreciating slightly at the end of last week, the pair remains trading in a comparatively high range.

EURUSD made minor losses finishing last week but successfully stayed above the 1.19 handle. The pair opened at 1.1949 and closed at 1.1937.

After reaching highs earlier in the week, the US 10-year Treasury yield shot to the highest level in over a year on Friday. Yields advanced after President Joe Biden signed the $1.9T COVID-19 relief package into U.S. law on Thursday afternoon. In his first primetime address as President, Biden said he would order states to make all adults eligible for vaccinations by 1st May, with the hope that America can “mark independence” from COVID-19 by Independence Day (4th July). The United States has recorded over half a million COVID-19 deaths – more than the death toll from WW1, WW2 and Vietnam combined.

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