IFX Market Report: Tuesday 19th January 2021

The Pound is up this morning with market sentiment growing increasingly positive as the UK successfully rolls out its new COVID-19 vaccination programme. Sterling is currently above 1.36 against the U.S. Dollar, and 1.12 against the Euro as we enter this morning’s open. Following the success of the first stage of the UK’s vaccine roll out, Vaccine Minister Nadhim Zahawi said yesterday in an interview with Sky News that he expects the government to reach its “achievable” target of having the whole population vaccinated by September.

GBPUSD opened sluggish yesterday morning at 1.3537 after a disappointing previous trading week. As the day progressed, the pair was able to catch some upside – finally finishing the session at 1.3582.

GBPEUR also managed to improve yesterday – opening at 1.1215 and closing at 1.1246. With vaccine momentum picking up, a weaker Euro could see the pair experience considerable volatility in the coming days.

Despite trading in a tight range on Monday, EURUSD depreciated throughout the session. The pair opened at 1.2071 and closed almost 50 pips below at 1.2026. This morning however, following a better-than-expected German ZEW release, EURUSD has managed to rise above 1.21.

The fact that the UK is leading the way on the vaccine front is doing well to cap any losses for Sterling, despite infection cases actually rising. Health Secretary Matt Hancock said yesterday that the data showed that over 4,000,000 people in the UK have received their first dose of a COVID-19 vaccine. Hancock described the occasion as a great achievement but cautiously noted that UK “don’t blow it now”. On Monday, the UK recorded a further 37,535 positive cases, and 599 deaths (of people of who died within 28-days of testing positive). Though this is far from positive, yesterday’s figure is a considerable decrease from the high of 68,053 positive cases reported on 8th January.

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