The Pound continues to rise on Wednesday as market sentiment become more ‘risk on’ – undermining safe-haven currencies such as the Dollar. As a result, GBPUSD trades at 1.3690 this morning, and GBPEUR is testing the 1.13 handle. Though it has not done much to boost sterling, another positive today was the release of UK CPI figures, with the YoY figure coming out at 0.6%.
Due to vaccine optimism and USD weakness, GBPUSD has been able to advance this morning, coming close to testing the 1.37 barrier. The pair opened subtly at 1.3594 on Tuesday morning but quickly gained some upside as the markets became hesitant on the Dollar as investors awaited a speech from Janet Yellen. The pair finally closed the day of at 1.3625 and continued to trade well overnight.
GBPEUR also gained some upside yesterday – starting at 1.1219, the pair went on to close at 1.1237. Similarly to cable, GBPEUR pressed on overnight as is currently trading above the 1.1290 mark.
In contrast, EURUSD experienced a quiet session yesterday – opening at 1.2116 and closing at 1.2124. However, with the market becoming more ‘risk-on’ the pair has been able to advance to 1.2150 as the Dollar has weakened.
The main story of yesterday was the confirmation hearing of Janet Yellen as US Treasury Secretary. The former Federal Reserve chair reinforced President-elect Joe Biden’s push for $1.9tn in relief measures, stating that her goal moving forward will be to rebalance the US economy. Yellen said that the US needs to “rebuild our economy so that it creates more prosperity for more people and ensures that American workers can compete in an increasingly competitive global economy”. In regard to China, Yellen called China America’s “most important strategic competitor”, noting that the Biden administration should be prepared to use a “full array of tools” to address, what she called, China’s “abusive, illegal and unfair practices”. She also commented on currency, stating that the Biden administration would harshly oppose any currency manipulation aimed at gaining a trading advantage.
Regardless of the fact the event will unlikely induce any market movements, the focus of markets (and the world) today will be Joe Bidens inauguration. President-elect Biden is to be sworn in as the 46th President of the United States just before 17:00 GMT, with Vice-President-elect Kamala Harris taking the oath of office alongside him. Reports suggest that following the incident at Capitol Hill earlier in the month, over 25,000 troops will be deployed in Washington today to guard the ceremony.
