IFX Market Report: Wednesday 27th January 2021

The Pound is up against its peers this morning as markets favour the speed of which the UK is rolling out COVID-19 vaccinations. In an interview with La Repubblica, CEO of vaccine manufacturer AstraZeneca Pascal Soriot praised the UK, forecasting that “by March, the UK will have vaccinated maybe 28 or 30 million people... the Prime Minister has a goal to vaccinate 15 million people by mid-February, and they’re already at 6.5 million. So they will get there”. The UK’s lead in the vaccination race is particularly noticeable when compared to countries in the EU – thus far, the EU have vaccinated 2 in every 100 people, whereas Britain has vaccinated more than 10 in every 100. Taking the current figures into account, it’s likely that major EU states such as Germany and France will not reach herd immunity until 2024.

GBPUSD started Tuesday strong, quickly advancing after opening the day at 1.3624. The pair met little resistance at 1.37 and pressed on higher, enabling cable to finish the session at 1.3728.

GBPEUR also managed to gain some upside yesterday. The pair opened the session at 1.1234 and gradually climbed higher, closing off at 1.1300 exactly.

EURUSD started Tuesday trading at 1.2126 and with little price action on the day, closed just above the open at 1.2148.

The main event of today will be the Fed Interest Rate Decision at 19:00. The US central bank is expected to leave interest rates unchanged near zero and maintain its bond-buying plan at around $120 billion per month. With this said, any comments on potential changes in the bond-buying program may inject volatility into the markets. It likely that any hint from Powell that he is considering an early scaling back of stimulus to curb speculative bubbles in the financial markets will more than likely send stocks lower, drawing haven demand for the U.S. Dollar.

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