IFX Market Report: Wednesday 24th February 2021

Sterling’s surge has continued as the UK currency reaches fresh highs against both the Euro and the Dollar. Cable was able to reach levels not seen since April 2018, and GBPEUR has not traded this high since February last year. As noted in this report yesterday, the main catalyst to the Pound’s strength has been the UK’s impressive vaccination roll out in comparison to other nations across the world. Goldman Sachs made comments yesterday that clearly reinforce this claim, noting that the Pound is currently benefiting from a “first mover advantage”. The Wall Street investment bank said in a research note that the vaccine roll-out and the decrease in infection rates in the UK means the UK is well positioned for a near-term rebound. This comes as the UK recorded its lowest daily infection cases of 2021 (8,489) yesterday.

Cable was once again able to better its position yesterday, opening at 1.4077 and closing at 1.4091. The pair tested the 1.41 barrier at 15:30 in the session but was unable to sustain itself at that level. It was not until the session had finished, after 18:00, was GBPUSD able to advance into the 1.41 range and maintain itself there.

GBPEUR also reached new heights yesterday, moving beyond the 1.16 handle for the first time since February 2020. The pair started the session trading well at 1.1575 and continued to grow stronger. The pair finally closed at 1.1604 yesterday and has gone on to climb higher this morning.

EURUSD in contrast showed little resistance to downside pressures yesterday as the pair was at a loss by the close of the session. The pair started Tuesday at 1.2160 and closed at 1.2142.

Given the UK keeps up its vaccine effort, and the economy shows signs of the “bounce-back” that is predicted as lockdown restrictions ease, the outlook for the Pound is extremely positive moving forward.

Older posts
Newer posts