IFX Market Report: Wednesday 6th January 2021

As a result of U.S. Dollar weakness, GBPUSD has been tipped to advance back towards its near 3-year high levels it reached on Monday. The new pressures being exerted on an already weak Dollar are a direct result of the senate elections taking place in Georgia this week. The greenback saw further losses as the two Democrat challengers appeared to be pulling ahead in the vote count yesterday. It is important to note that if the Democrats are to win in Georgia, they will have full control of legislature and executive.

As the Dollar has depreciated, a steady Pound was impressively able to capitalize in Tuesday’s session. GBPUSD opened the morning at 1.3583, but after a choppy start the rate managed to gain some upside, finishing the day off at 1.3619.

GBPEUR in contrast saw little price action during the session. The pair opened at 1.1073 and was able to sustain itself there, and improve slightly by the close, finishing at 1.1078.

EURUSD overnight was able to reach a 33-month high of 1.2327 as risk sentiment weakened as the chances for a Democrat-controlled US Senate increased. Yesterday, the pair opened at 1.2267 and closed at 1.2294. This is the fourth consecutive day that pair has reached 1.23 but been unable to maintain that position. If the election swings in the Democrats favour, maybe EURUSD might be able to finally cement itself above the 1.23 range.

Back on this side of the pond, England's third national lockdown has legally come into force, with MPs set to vote retrospectively on it later. This comes as new daily cases on Tuesday reached 60,000 for the first time. At a Downing Street news conference, Prime Minister Boris Johnson said he had "no choice" but to impose the new lockdown, with the number of patients in hospitals 40% higher than in the first peak. On a more positive note, Mr Johnson did also note that 1.3M people in the UK had been vaccinated thus far. COVID Vaccine Deployment Minister, Nadhim Zahwai, also stated that new daily vaccination figures for the UK will show there has been a “significant increase” in the number of people who have received the jab.

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