12/02 – Sterling drops for the first time in six days

GBP: UK averts recession

EUR: Draghi closer to forming government

USD: US dollar in demand ahead of Presidents Day

Sterling

Sterling finished lower for the first time in 6 days versus the US dollar in what largely looks to be profit taking before the long weekend with Presidents day set to fall in the US on Monday.

Brexit reared its ugly head again yesterday also with the UK and EUR locked in a standoff over how to implement the Brexit trade deal. Michael Gove and EC Vice President Maros Sefcovic met in a rare face to face meeting in London yesterday with the issue covering the part of the UK’s exit covering N. Ireland, which imposed checks on goods moving across the Irish Sea from Great Britain. Another meeting is scheduled for 24th February.

UK GDP figures released this morning showed that the economy grew more than what was expected in the fourth quarter of 2020. GDP rose by 1% from the third quarter, averting immediate risk of another recession. Growth for the whole of 2020 was -9.9%. The data has done nothing to support sterling in early trade this morning but nonetheless the overall trend remains for sterling to continue to perform over the rest of the year.

Euro

The euro continued to strengthen versus the US dollar for the fifth consecutive day as Italy’s largest force in Parliament, the Five Star Movement joined other parties; the centre-left Democratic Party and the anti-migrant League of Matteo Salvini; to give support for Premier-designate Mario Draghi.

In early trade we have seen yesterday’s gains erased as markets flock to the US dollar.

US dollar

The dollar benefited in late trade yesterday after a late fall on Wall Street yesterday. Reuters reports that US House Speaker Nancy Pelosi hope to have the Covid relief plan done by the end of February before the unemployment benefits expire on March 14th.

As mentioned above, with Presidents Day coming on Monday, we may well continue to see investors seek the US dollar before the long weekend.

Market rates

Today’s Interbank Rates at 08:21 am against sterling. Movement vs yesterday.

Euro €1.139 ↓
US dollar $1.379 ↓
Australian dollar $1.783 ↓
South African rand R20.248 ↓
Japanese yen ¥144.79 ↑

Have a great day and a better weekend.

Thanks for subscribing to our market reports!

You've been added to our Chief Economist's mailing list for his morning reports.

Share:
Adam Baldwin

Adam Baldwin

Adam is part of the Marketing team at Equals Money and oversees content and communications for the business. When he’s not at his computer, you will most likely find him trialling some Dad jokes on unsuspecting audiences in and around central London.