Pound (GBP) Remains Muted Despite No Additional restrictions, US Dollar (USD) Tumbles Ahead of Fed Meeting Minutes

Pound (GBP) Range-Bound as PM Johnson Announces No Further Restrictions 

The Pound has remained subdued today, largely trading with a limited range against its rivals. Sterling saw a spike this morning after Prime Minister Boris Johnson announced no further restrictions at a Tuesday evening press conference. 

Whilst the lack of additional measures may have given investors hope for the Pound’s chances, ongoing staff shortages across many of the UK’s sectors driven by soaring Covid-19 case numbers may limit the currency’s gains. 

Looking to the rest of the week for the Pound, Thursday will bring December’s PMI for the country’s services sector. With hospitality businesses having struggled during the winter period, a forecast fall in the index could also drive the Pound down. 

Euro (EUR) Boosted Despite Recovery Slowdown in December 

The Euro has risen against many of its competing currencies today, as a weakened US Dollar helped buoy the currency. This comes amid continually rising Covid-19 cases across the continent. 

The Euro’s gains may be limited however, as figures from December’s composite PMI indicated a slowdown in the Eurozone’s economic recovery. Restrictions across the trading bloc particularly hurt the services sector and aw the index fall to 53.3 in December, its lowest level since March.  

The Euro has a busy rest of the week, with inflation data expected for Germany on Thursday and the Eurozone on Friday. Both are forecast to show inflation holding steady at a high level, potentially increasing speculation of an interest rate hike by the European Central Bank. A predicted fall in retail sales for the Eurozone could drive EUR down however. 

US Dollar (USD) Falls as Investors Await FOMC Minutes 

The US Dollar (USD) has dipped amongst its competitors today, as investors hold off on any significant bets ahead of the release of the Federal Reserve’s latest meeting minutes on Wednesday evening.  

Investors will be looking for any indications of an interest rate rise in 2022, with upward movement in USD to be expected if this is the case. 

Aside from the Fed’s meeting minutes due on Wednesday evening, the US Dollar is set to see further significant data this week. Non-manufacturing PMI figures for December on Thursday are forecast to fall as supply bottlenecks continue to hamper the country’s recovery, which could drive USD down. Non Farm Payrolls and Unemployment rate figures for December could show a tightening labour market, and if this is the case the US Dollar could climb. 

Australian Dollar (AUD) Climbs as Iron Ore Demand Soars 

The Australian Dollar has climbed against many of its competitors today, as the ‘Aussie’ saw a boost from rising commodity prices. Increased demand from China helped propel the price of iron ore upwards despite the introduction of further restrictions on factory output. 

Looking to the week ahead for the Australian Dollar, Wednesday evening’s final reading of the PMI index for the services sector is currently forecast to fall. Should theses figures print as forecast then it could well cause AUD to dip as the Omicron variant further hampers the country’s ‘reopening’.  

Canadian Dollar (CAD) Dips Amid Rising Covid-19 Cases 

The Canadian Dollar (CAD) has fallen against its rivals today as Covid-19 cases across the country steadily rise. Ontario province reported 13,758 new cases on Monday as it introduced fresh restrictions, including closing schools and limiting retail capacity, in a bid to combat the Omicron variant.