Sterling hits 33-month highs
The Pound has hit 33-month highs against the US Dollar today, boosted by general US Dollar weakness, and positivity regarding the UK vaccine rollout. It's hoped with vaccines becoming more common, the economy will soon be able to recover and return to pre-Covid growth levels. However, the economic backdrop is less impressive, with the UK recording its worst growth figures in over 300 years, with an annual fall of 9.9% in 2020. In the week ahead, inflation numbers will be released, as well as data detailing the health of retail spending, as well as the manufacturing and services sectors.
The European vaccine process is still lagging behind some other nations, with only 4% of the collective population having received the jab. Other countries leading the way include Israel with 66% of the population vaccinated, followed by 19% in the UK and 13% in the US. However, President of the European Commission President Ursula von der Leyen has said that she anticipates 70% of adults will have been vaccinated by the end of summer. Growth forecasts for the Eurozone this year and next are currently cautiously optimistic. Last week the Pound traded between levels of 1.13 and 1.14. This week, some events that could influence the GBP/EUR exchange rate include, growth data, along with stats relating to services and manufacturing activity.
Worst-performing G10 currency
The Pound traded between levels of 1.36 and 1.38 last week, with Sterling gaining for the fifth week in a row. Broad US Dollar weakness has seen it become the worst-performing G10 currency in the past year. The US markets are closed today while the nation celebrates Presidents' Day, but the week ahead has some events which could cause market movement, such as retail spending, manufacturing, and service sector numbers. Additionally, the Federal Reserve will also release its latest meeting minutes.
AUD and NZD
A surge in iron-ore
Last week, the Pound traded between levels of 1.77 and 1.79 against the Australian Dollar, while fluctuating between 1.89 and 1.92 versus the New Zealand Dollar. A recent surge in Australia's largest commodity, iron ore, has created some support for the Aussie currency, despite the Reserve Bank of Australia announcing it would be extending its bond-buying programme. RBA Governor Phillip Lowe has said that 'the bond-purchase programme has helped to lower interest rates and has meant the Australian Dollar is lower than it would have been'. However, the Aussie's still been strong, climbing by around 2.5% versus it's US Dollar counterpart. In the week ahead, the Reserve Bank of Australia will release its latest meeting minutes, followed by Australian labour market, retail, manufacturing, and services data later in the week.
Meanwhile, New Zealand's largest city, Auckland, has been plunged into a three-day level 3 lockdown after three coronavirus cases were detected--the rest of the country will have to adhere to level 2 conditions. Overnight, Kiwi data showed a decline in services activity in January, reflecting Covid issues such as freight problems, and a slower return to normal following the holidays. New Zealand retail spending will be out after the weekend, with little influential data out during this week.
WTI hits 13-month high
Last week, the Pound traded between levels of 1.74 and 1.76 versus the Canadian Dollar. Meanwhile, the US Dollar to Canadian Dollar exchange rate hit a three-week low. The Canadian Dollar has been bolstered by rising oil prices, with West Texas Intermediate reaching a 13-month high on Friday. Oil prices and the Canadian Dollar are closely linked, so any further movement could impact the way the Loonie trades. In the week ahead, inflation numbers will reach the market, as well as retail spending numbers, giving the CAD exchange rate some opportunity to move.