Pound Sterling

Sterling Rebounds as Market Sentiment Improves ahead of Biden Inauguration

Pound News: Jump in UK Inflation and Vaccine Optimism Thrust Sterling Higher

An unexpectedly strong UK inflation rate report is helping the Pound to rally today. The inflation uptick came as a sign that the UK’s economy performed well in December despite the coronavirus restrictions.

Optimism that Britain continues to ramp up its coronavirus vaccine programmes are also helping Sterling today.

Further Sterling gains may be limited ahead of retail sales and business activity data releases on Friday. As forecasts indicate another contraction in the UK services PMI, the Pound could come under pressure.

Euro News: European Central Bank (ECB) Tone in Focus

Speculation that the European Central Bank (ECB) will remain highly dovish for an extended period of time weighed on the Euro today.

The shared currency also came under pressure from the negative Eurozone inflation reading while also remaining sensitive to movement in the US Dollar ahead of the inauguration of US President-elect Joe Biden.

The European Central Bank’s January policy decision will be held tomorrow. If the ECB expresses concern about the strength of the Euro, or if the US Dollar strengthens, these factors could weigh on Euro appeal.

US Dollar News: Biden Inauguration to Drive Risk Appetite

US President-elect Joe Biden will be inaugurated as the 46th President of the United States today. It is expected his administration will take quick action on key financial policy.

For example, a big stimulus bill is expected, which is making investors more eager to take risks, leaving the safe-haven US Dollar’s strength limited.

However, the US Dollar could rise if Biden hints at policy such as tax hikes, potentially souring market mood and increasing USD safe-haven demand.

Canadian Dollar News: Bank of Canada (BoC) Policy Decision Ahead

This afternoon will see the Bank of Canada (BoC) make its January policy decision, although analysts expect the central bank to maintain its policy stance.

Combined with resilient oil prices, this is helping the Canadian Dollar to hold its ground after risk aversion earlier in the week.

Reaction to the BoC will likely dominate Canadian Dollar movement tomorrow, while Canadian employment data from ADP and shifts in oil prices could also influence the direction of CAD trade.

Australian Dollar News: ‘Aussie’ Outlook Continues to Impress

While the Australian Dollar is being weighed by market risk-aversion this week, the currency’s outlook remains bullish overall. Markets have fairly optimistic expectations for upcoming Australian job market results as well.

If Australia’s December job market report impresses investors tomorrow, it could boost Australian Dollar demand and help it to claw back some of the losses it saw amid risk-off trade.

Upcoming Data

Thursday, 21st January

00:30    Australian Job Market Report

07:45    French Business Confidence

11:00    UK CBI Business Optimism

11:00    UK CBI Industrial Trends Orders

12:45    European Central Bank (ECB) Policy Decision

13:30    Canadian ADP Employment Change

13:30    US Building Permits and Housing Starts

15:00    Eurozone Consumer Confidence