17/11 – Vaccines vs lockdowns

Jeremy Thomson-Cook
Jeremy Thomson-Cook 17 November 2020

GBP: Sterling rises on positive Brexit reports

EUR: Rangebound for now

USD: California locks down further as cases rise


Despite the knowledge that until yesterday the UK had not pre-purchased any of the Moderna vaccine, sterling was able to join in the move higher alongside other risk assets. Brexit news is also supporting the pound with the Sun reporting today that U.K. Brexit negotiator David Frost has told Boris Johnson that, if a trade deal is there to be done with the EU, he can expect to see it “early next week.” There is a huge amount of emphasis on the word “if,” but Frost has reportedly pinpointed “a possible landing zone” as soon as next Tuesday.

GBPUSD could easily take a run towards the 1.33 level in the coming days if expectations are lifted further but for gains beyond that, we’ll need to see white smoke from Brussels in the coming week.


As with sterling, the euro managed to eke out some vaccine related gains yesterday but has stayed relatively quiet since the news was released. Comments from ECB policy setters were not enough to rock the boat either and it makes sense for the single currency to remain rangebound for now especially given Poland and Hungary’s veto of the EU recovery fund.

US dollar

Another vaccine announcement caused the USD to shrink back once again as investors became confident that some semblance of normality may be with us through 2021. Moderna’s vaccine has been shown to be more effective than Pfizer’s and will be able to be stored at higher temperatures, making it more useful to emerging market economies that may not have the refrigerated supply chains necessary to keep the medicine appropriately.

Of course, this optimism allied to expectations of stimulus is coming up against the reality of local lockdowns but for now, hope is triumphing over fear and the dollar could easily remain on the back foot.


The minutes from the Reserve Bank of Australia meeting overnight suggest that the central bank will continue to add stimulus to the Australian economy with a particular focus on the unemployment rate. Comments suggest that the central bank remain happy with the level of the AUD and see it valued close to its fundamentals for now.

Have a great day.