GBP: Vaccines news could be seen as a positive
EUR: No support coming through
USD: Biding its time
Sterling is continuing to pressure the euro and pushed yesterday to the highest level against the single currency since February 2020. There is every chance that this continues with UK GDP due tomorrow plus a dollar move this afternoon that would likely see EURUSD move lower than GBPUSD.
News overnight that the UK has sourced another round of Pfizer vaccines for booster injections for UK citizens may also help support sterling. This comes as most governments have begun to warn that Covid-19 prevention will be a lot like flu prevention moving forward.
The story of the euro at the moment is the story of the US dollar and therefore all eyes for the single currency should fall on how US inflation materialises this afternoon at 13.30. It is not out of the realm of possibility that a strong number today and a continued pressure from the ECB could see EURUSD breaking lower towards the 1.15 mark over the coming months.
Despite the focus on unemployment in the United States today’s inflation number is still very important. It’s still likely too early to tell how inflation is settling in most developed nations with the effects of reopening and supply chain issues still making a material mark on businesses to be able to price their goods and services competitively and attractively.
Any hint that inflation has not dropped back a little following reopening will be seen as a strong sign for both US yields and the US dollar. It may not look like it in developed markets – against the GBP, EUR, JPY for example – but the dollar is less than a per cent from its highest level of the year. A strong inflation number will be enough to see it break to those highs in the coming days.
GBPUSD may be supported by tomorrow’s GDP announcement, but EURUSD will be looking for help.
Oil prices recovered yesterday following a report that showed storage reserves in the US dipped markedly in the past week. Conversations on oil following the United Nations report on climate change earlier in the week suggest that prices on oil five years from now may be much lower than where we are on demand grounds. That support therefore for CAD, RUB, NOK and other commodity currencies may also start to fall away.
Today’s Interbank Rates at 09:06 against sterling. Movement vs yesterday.
|US dollar||$1.382 ↓|
|Australian dollar||$1.885 ↑|
|South African rand||R20.50 ↑|
|Japanese yen||¥153.1 ↑|
Have a great day.