Sterling sentiment remained strong yesterday because of expectations for a robust recovery as lockdown measures are eased. Currency markets shrugged of the news that the Astra Zeneca vaccine rollout had been halted in several countries, including Norway and Denmark due to concerns over potential blood clots. There was no comment on the UK programme.
The Pound gradually gained on the Dollar, reaching highs of 1.3980 near the close of play. Further gains on Wall Street were offset by a decline in the FTSE 100 index and progress against the Dollar was paused.The Euro settled around 1.1675 after defending the area above 1.1695.
This morning, UK GDP declined only 2.9% in January compared to a forecasted 4.9% decline, although industrial production did fall by more than expected. The Pound is up following the data, trading near 1.1682 to the Euro, although a stronger Dollar held Sterling held below 1.4000.
US initial jobless claims declined to 712,000 in the latest week from a revised 754,000 the previous week and below consensus forecasts of 725,000. Continuing claims also declined to 4.14M from 4.34M. There was, however, a sharp increase in pandemic assistance claims of over 2.0M on the week with total claims over 20.0M.
There were expectations of strong US growth, especially with a very strong fiscal stimulus with mixed implication for the dollar.
Global equities continued to rise yesterday and overnight, as US President Biden signed the $1.9tn stimulus bill into law. He also ordered states to make all US adults eligible for vaccinations by 1st May 2021, and said 100m shots would be administered by his 60th day in office.
The Euro held firm heading into Thursday’s US open with the single currency moving above 1.1950 as the Dollar remained generally on the defensive. The ECB made no changes to interest rates as Bank President Lagarde stated the overall economic situation will improve in 2021, but uncertainty remains.
The Euro was hampered by further difficulties over the Eurozone vaccination programme amid persistent difficulties in the supply chain pulling the single currency to 1.1930 before pushing back higher near to the European close to 1.1985 mark with the Dollar unable to gain any sustained support.
As of writing, the Euro currently trades just below the 1.1950 against its US counterpart.
Posted in Daily Market News on Mar 12 2021