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Is Sterling Momentum Slowing?

Is Sterling Momentum Slowing?

GBP

Sterling traded higher for the third consecutive day yesterday against the Dollar although momentum seems to have slowed with bulls lacking follow-through past the 1.3375 area. 

The upbeat news on AstraZeneca’s COVID-19 vaccine progress has boosted investors’ sentiment, pushing the Pound higher against its main rivals. Hopes of a cure being rolled out over the coming months have been especially Sterling supportive, since the UK has been one of the worst hit countries globally by the pandemic.

Furthermore, the market remains confident about a Brexit deal as representatives of the UK and the EU remain negotiating, aiming to bring positions closer in controversial issues with less than 6weeks to the December 31st deadline when the transition period ends. 

 

USD

The greenback remained depressed on the back of the prevalent risk-on environment amid the progress toward remedies for the highly contagious coronavirus disease. Meanwhile, the formal start of US president-elect Joe Biden’s transition to the White House cleared the uncertainty on the US political front. This, along with reports that the former Fed Chair Janet Yellen could become the next US Treasury Secretary, provided an additional boost to the already upbeat market mood. The USD bulls failed to gain any respite from Tuesday’s disappointing release of the Conference Board’s Consumer Confidence Index, which dropped notably to 96.1 in November from 101.4 in the previous month.

Despite the supporting factors, the pair lacked any strong bullish conviction and the upside remained capped below the 1.3400 round-figure mark. Later during the US session, a slew of top-tier US macro data, followed by the FOMC meeting minutes will determine the next leg of a directional move for the greenback and provide some meaningful impetus.

 

EUR

The Euro has surpassed the 1.19 mark, the highest area in around 10 weeks as markets cheer the US transition and upcoming vaccines. A busy data day awaits traders ahead of the Thanksgiving holiday but with multi month highs in sight will the single currency have the momentum to break higher. 

With the Eurozone data calendar light on today, the Euro remains at the mercy of the broader market sentiment. As of writing, the Euro currently trades just above the 1.1916 mark against its US counterpart.  

 

Data to watch

09:00 – EUR – ECB Financial Stability Review 

13:30 – USD – Prelim GDP

13:30 – USD – Unemployment Claims 

15:00 – USD – Revised UoM Consumer Sentiment 

19:00 – USD – FOMC Meeting Minutes

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