Pound Sterling

GBP/USD near 32-Month High before Retreat ahead of UK Coronavirus Restrictions Announcement

Pound News: Coronavirus Uncertainties Weigh on Brexit Relief

Pound investors were highly relieved last week that the UK and EU had finally implemented a post-Brexit trade deal.

However, the relief rally seen last week is already running out of steam in anticipation of Boris Johnson’s announcement this evening that is expected to confirm the England will enter a third national lockdown.

With no notable UK data due for publication tomorrow, developments in Britain’s coronavirus situation will continue to be the key influence in Pound movement.

Euro News: Euro Outlook Still Resilient on Jittery Rivals

The Euro has been benefitting from Brexit relief like the Pound. While the benefit has not been as strong as the Pound’s, the Euro is also appealing due to its negative correlation with the US Dollar, which continues to fall.

Today’s Eurozone PMIs showed resilient manufacturing, which further supported the Euro.

If upcoming Eurozone data continues to show economic resilience in the Eurozone, investors may continue to find the Euro appealing.

US Dollar News: Risk-Sentiment Keeps a Lid on the US Dollar

The safe-haven US Dollar is unappealing once again as market optimism continues rising over the potential recovery from the coronavirus pandemic.

As vaccines continue to be rolled out around the world, higher risk-sentiment combined with low US interest rates is leaving the US Dollar unappealing.

ISM’s US manufacturing PMI for December will be published tomorrow. This key print could make the US Dollar even less appealing if it shows the pandemic continues to hurt the US economy more than feared.

Canadian Dollar News: Rising Oil Prices Continue to Buoy CAD

The risk and trade-correlated Canadian Dollar has been underpinned by rising oil prices recently.

Expectations that OPEC+ could continue to cut oil production and stimulate demand have been boosting oil prices, which continues to lead to stronger Canadian Dollar demand.

Canadian PPI data is due tomorrow, although oil prices and key Canadian job market data due later in the week will likely be bigger influences for Canadian Dollar movement.

Australian Dollar News: Risk-Sentiment Remains Resilient

Despite concerns about surging coronavirus infections, markets remain optimistic about an economic rebound from the pandemic as vaccines roll out in major economies. This is keeping risk-correlated currencies like the Australian Dollar appealing.

The Australian Dollar will continue to be driven by shifts in market sentiment until at least Wednesday, when Australian services PMI data is due to be published.

Upcoming Data

Tuesday, 5th January

07:00    German Retail Sales

08:55    German Unemployment Rate

13:30    Canadian PPI Rate

15:00    US Manufacturing PMI