GBP: Can the reopening help secure sterling
EUR: If vaccine levels increase so will euro
USD: Inflection point
Sterling
Stronger than expected manufacturing and industrial production numbers this morning have helped add a little back bone to sterling prices but more will be needed from the UK data picture before sterling is able to meaningfully push onwards. Unfortunately, we may have to wait a week or so for a data point that the UK wants to listen to – CPI on the 21st being the most likely next checkpoint for GBP.
In the short term and without that support, sterling may struggle against both the USD and EUR which have data and vaccine progress working in each of their favours respectively.
Euro
With the market finally taking notice of a rapidly increasing vaccine programme the euro managed to spend time above 1.19 yesterday, inching closer to what we would regard as ‘fair value’ for the single currency.
US dollar
Dollar is a little stronger this morning courtesy of some buying pressure ahead of this afternoon’s inflation release. In concert with Thursday’s retail sales announcement, today’s CPI reading will tell us a story of how much more expensive life is becoming in the US. If both numbers are strong – prices rising and consumers buying strongly – then another round of USD strength should be in order.
Elsewhere
In a sign that tensions may be softening slightly between the US and China, reports today suggest that Janet Yellen as US Treasury Secretary will decline to declare the Chinese government as currency manipulators. While the trend in USDCNY is currently higher, CNY spent a lot of the past 6-9 months gaining against the USD.
While this declaration may help the yuan in the short term, multiple issues remain – Trump’s trade tariffs remain in force – and so we cannot see this changing the outlook massively for the yuan which should remain on the back foot as US yields roll higher.
Market rates
Today’s interbank rates at 08:48 against sterling. Movement vs yesterday.
| Euro | €1.156 ↑ |
| US dollar | $1.376 ↑ |
| Australian dollar | $1.803 ↑ |
| South African rand | R20.09 ↓ |
| Japanese yen | ¥150.4 ↑ |
Have a great day everyone.
