Pound Sterling

Pound Firms on UK Economic Optimism

Pound News: Moves Higher despite Soaring Covid-19 Cases

The Pound consolidated its pre-Christmas gains in the run up to New Year on optimism the UK may avoid severe economic disruption from record high UK coronavirus cases that hit 189,000 on Thursday.

News that the UK had met the target of offering every eligible adult a booster Covid vaccination also bolstered GBP exchange rates, with 7 in 10 adults receiving a booster vaccine.

Going into 2022 the Pound could experience volatility if rising hospitalisations resulting from Covid-19 pressure the UK government into tightening restrictions, with speculation starting to weigh on Sterling on Friday afternoon.

Euro News: EUR Dented by Strict Covid Measures

The Euro struggled in thin post-Christmas trade at the end of this week as stricter measures in countries across the Eurozone dented EUR sentiment.

Soaring Covid-19 cases in Europe added to the gloomy outlook, with daily coronavirus cases topping 200,000 in France for two days in a row.

While Covid-19 developments will likely continue stoking volatility in EUR exchange rates, finalised Eurozone manufacturing PMI released on Monday may add to the Euro’s losses the data is expected to confirm a slowdown in the sector.

US Dollar News: USD Recovers some Losses as Mood Turns Cautious

The US Dollar struggled for direction through much of this week before regaining some ground on Friday as US Treasury yields holding above 1.5% going into the new year underpinned support for the US Dollar.

Souring market sentiment also increased demand for the safe-haven currency, as did initial jobless claims unexpectedly falling last week to suggest strength in the US job market.

Looking ahead, the ISM manufacturing PMI may weigh on USD next Tuesday, as forecasts point to a slight slowdown in activity in the sector. At the same time, falling job vacancies in JOLTs job openings data will also likely drive some movement in USD.

Canadian Dollar News: CAD Strengthens on Oil Price Jump

The oil-sensitive Canadian Dollar made significant gains through this week as WTI crude prices rallied, although they eased slightly during Friday’s session.

After peaking at $77 a barrel on Thursday, WTI crude held above $75 going into the new year and bolstered CAD exchange rates.

Rising demand for oil may underpin the Canadian Dollar at the start of 2022, as countries attempt to keep economic momentum going. Meanwhile, Canadian manufacturing PMI for December may provide additional support.

Australian Dollar News: AUD Boosted by Upbeat Mood

The Australian Dollar made gains this week as a more upbeat market mood supported the risk-sensitive ‘Aussie’, and China’s NBS manufacturing PMI climbed to a five-month high in December.

However, a surge of coronavirus cases in New South Wales limited AUD exchange rates over fears of more economic disruption.

Looking ahead, the upcoming finalised Australian manufacturing PMI released on Monday may trim AUD gains further as the index is expected to confirm a slowdown.

Upcoming Data

Monday 3rd January

09:00 EU Eurozone Manufacturing PMI Final (Dec)

22:00 AU Australian Manufacturing PMI Final (Dec)

Tuesday 4th January

07:00 EU German Retail Sales (Nov)

08:55 EU German Unemployment Rate (Dec)

09:30 UK Manufacturing PMI Final (Dec)

14:30 CA Manufacturing PMI (Dec)

15:00 US ISM Manufacturing PMI (Dec)

15:00 US JOLTs Job Openings (Nov)