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Market Update

• Posted by currencies in Brexit, coronavirus, Currency, Dollar, EUR, GBP, Prime Minister, Sterling, UK, Uncategorised
• January 29, 2021
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Sterling endured a setback towards the middle of the week but then recovered through Thursday as currencies reacted to the ups and downs in global equity and commodity markets, confirming the growing importance of the global picture for the UK currency.

The near-term outlook for the Pound will therefore likely depend on how broader markets trade, and whether the rebound can extend or whether the dip seen on Wednesday arises again.

The GBPEUR exchange rate has risen by two-thirds of a percent in the past week, delivering a new 8-month high at 1.1347, and in the process extends a trend of appreciation that has been in place since December 0.7.

The Dollar retreated as stock markets and commodity prices started to recover some of the substantial ground lost over the past 24 hours, moves aided by some solid U.S. economic numbers.

The GBPUSD exchange rate went higher to 1.3677 after it was announced the U.S. economy grew 4.0% on an annualised basis in the final quarter of 2020 and the rate of job losses slowed.

The Euro-to-Dollar exchange rate meanwhile rose a quarter of a percent back to 1.2133. Also released alongside U.S. GDP was the weekly Initial Jobless Claims data, which indicated 847K people filed for unemployment support in the previous week, which is less than had been expected by the market.