The Pound experienced heightened volatility in yesterdays session and was able to make significant gains against the U.S. Dollar, spiking to its best levels since May 2018. Sterling also performed well against the Euro on Thursday but met fierce resistance at the 1.1325 mark. The Pound’s recent strength is mainly due to the smooth transition of Joe Biden as United States President – the new Democratic administration has set a positive tone in the market, creating a more upbeat sentiment, allowing GBP to benefit.
GBPUSD opened Thursday trading just above the 1.37 handle at 1.3707. Quickly after the open the pair came under considerable volatility and saw a lot of movement. As President Biden started work immediately in the White House, markets grew increasingly positive, allowing cable to climb. The pair peaked at 1.3746 and closed at 1.3720.
GBPEUR also experienced a volatile session on Thursday. The pair started well trading at 1.1310 but soon dipped below that mark and was unable to recover, closing finally at 1.1299.
EURUSD also managed to gain some upside yesterday. Starting the day at 1.2119 the pair went on to close at 1.1242.
In an attempt to gain the upper hand in the battle with COVID-19, President Biden has signed 10 executive orders aimed at improving the current desolate situation in the US. In regard to total deaths from COVID-19, the United States is the worst-hit country with more than 406,000 lives lost since the start of the pandemic. The new strategy differs from the previous administration’s in that it stresses a more national policy, as opposed to relying on individual states to decide what is best. The White House released a seven-point plan outlining how they will fight the virus, highlighting the importance of vaccines and reliable testing. The plan states that “the American people deserve an urgent, robust and professional response to the growing public health and economic crisis caused by the coronavirus outbreak”. On Twitter, the new President assured the American people that his new administration is doing everything “to get the virus under control as soon as possible”.
On the data front, it’s PMI day. Starting the day off we Retail Sales from the UK, swiftly followed by January Markit PMI reports from Germany, the Eurozone, the UK and US.