Cable has surpassed the 1.38 mark this morning due to a weaker Dollar as progress is made on US fiscal stimulus negotiations. In a process called reconciliation, Democrats in both the House and Senate filed joint budget resolutions that will allow President Biden to pass the majority of his proposed $1.9 trillion package with a simple majority. Republicans have pushed back on Biden’s proposal, claiming that “the economy’s output gap in the fourth quarter of 2020 was a shortfall of $665B”, where as Biden’s new package is nearly triple that figure. In spite of this, President Biden’s recent comments suggest that he will ignore these criticisms – claiming that if he has to “choose between getting help right now to Americans who are hurting so badly and getting bogged down in a lengthy negotiation or compromising on a bill, that’s an easy choice. I’m going to help the American people who are hurting now”. Thus, the delivery of such a substantial fiscal support package will likely lead to more downside for the U.S. Dollar.
As the morning progresses, so too does GBPUSD’s performance. The pair performed well yesterday, opening at 1.3769 and closing just below the 1.38 handle at 1.3794. This morning however, cable has gone from strength to strength, advancing past levels not seen since April 2018.
In contrast, GBPEUR appears to be sticking to a tight range. The pair started Tuesday at 1.1408 and closed the session at 1.1395. The pair continues to hoover around this mark this morning, trading just above the 1.14 handle at present.
A weaker Dollar also meant gains EURUSD. The pairs gains were minimal but after the recent run of bad from due to a weaker Euro, all and any upside was welcomed. Starting the day at 1.2069, the pair was able to surpass the 1.21 mark, and finish Tuesday at 1.2104.
We have a packed calendar today – with notable central bank speakers and inflation figures from the US in the afternoon. First of today’s speakers will be ECB President Christine Lagarde at 13:00, followed by BoE Governor Andrew Bailey at 17:00, and finally Fed Chairman Jerome Powell will be speaking at 19:00.