IFX Market Report: Monday 8th February 2021

The Pound is trading strong this morning against the Euro and U.S. Dollar as markets open for another trading week. Supporting the Pound continues to be the UK government’s impressive vaccination roll out – with over 11.5M people receiving their first jab, the government are targeting 15M by this time next week (15th). Thursday’s Bank of England rate decision also helped to prop up Sterling, as “the MPC voted unanimously to maintain Bank Rate at 0.1%”. Fears of future potential rate cuts were also dismissed when the bank said: “the Committee does not intend to tighten monetary policy at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably”.

After a turbulent week, GBPUSD opened at 1.3700 on Friday morning and was able to gain a little upside, closing at 1.3714. Cable trades this morning just above the 1.37 mark.

After a week of gains for GBPEUR, the pair fell slightly on Friday, closing below 1.14 on the day. The pair opened at 1.1438 and was unable to maintain that position, finishing the week at 1.1395.

A stronger Euro also meant gains for EURUSD at the end of last week. After a tough run of late, the pair opened at 1.1977 and surpassed the 1.20 handle, closing the week at 1.2035.

While the Euro was able to recover some of the losses it has made against the Pound on Friday, analyst predict future upside in favour of Sterling. The divergence in vaccinations between the UK and Eurozone will likely prove to be a defining factor in both territories reaching their recovery targets. As a result, the Pound is likely to mirror the vaccine effort, and out-do its European counterpart. According to Our World in Data, 16% of the UK population have received their first dose of the vaccine, while in Germany and France, a meagre 3.5% and 2.8% have received their first dose.

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