Monday proved to be another positive start to the week for Sterling as it reached fresh 3-year highs against the U.S. Dollar. Cable is 23% higher from its low of 2020, suggesting that all the burdens of last year, such as Brexit and negative interest rates, have been unloaded, despite the rise of a global pandemic. Sinister as it may sound, the COVID-19 pandemic, and the UK’s impressive reaction to it in comparison to our international “friends”, is what continues to drive the Pound. As we lead the race to having our whole population vaccinated, Boris Johnson yesterday announced his new four-step plan to ease England from lockdown restrictions. Prime Minister Johnson last night described his plan as a “one-way road to freedom” and warned that he could not guarantee it would be irreversible “but the intention is that it should be”.
As markets eagerly awaited Johnson announcement, GBPUSD started the day just below the 1.40 mark at 1.3995. Cable then quickly advanced further and was able to close at 1.4075 but was still going strong. This morning the pair met hard resistance at 1.4097 and trades not far below that rate at present. Some analysts believe we could see the rate reach 1.41 today.
Despite not experiencing as much price-action as Cable, GBPEUR also gained some upside to start the week off. The pair opened Monday morning at 1.1566 and closed at 1.1579.
A weaker Dollar also meant gains for EURUSD. The pair started Monday at 1.2099 and was able to close above the 1.2150 mark at 1.2154.
On the data front, a packed calendar today. Starting off this morning we had employment data coming out of the UK, showing the Employment Change for the month of November to be -114K, with a previous of -88K. UK Unemployment Rate for December came out as forecasted at 5.1% with a previous of 5%. At 10:00 (GMT) markets get the Core Inflation Rate YoY from the Eurozone, estimated to come out at 1.4%. Then in the afternoon from across the pond we have the House Price Index MoM, CB Consumer Confidence for February, and Fed Chair Jerome Powell will be giving a testimony.
