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Thu 28 Jan 2021 16:11GMT

Pound (GBP) Struggles as New UK Lockdown Restrictions are Imminent

Published: 4 Jan at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China,

Pound (GBP)

The Pound (GBP) struggled today following the news that the UK Prime Minister, Boris Johnson, would be announcing further updates on Covid-19 restrictions.

With Scotland already set to enter a full national lockdown, GBP investors are concerned that England could soon follow.

As a result, UK markets are becoming worried about the nation’s economic situation, which could suffer throughout January if the nation enters stricter restrictions.

Today also saw the release of the UK’s latest Manufacturing PMI, which beat forecasts.

Nonetheless, GBP investors were unmoved by the data, with the months ahead likely to drag on the British manufacturing sector.

Euro (EUR)

The Euro (EUR) benefited from today’s publication of the latest Eurozone Manufacturing PMI, which beat forecasts and rose to its highest level since May 2018.

Additionally, Euro traders are becoming more hopeful for the Eurozone’s economic recovery, with both Covid-19 vaccines and Brexit being in the rear-view mirror promising relative stability for the bloc.

Nevertheless, EUR traders are remaining cautious as a new strain of Covid-19 could threaten the effectiveness of Covid-19 vaccines or help spread the virus faster than before.

US Dollar (USD)

The US Dollar (USD) has struggled as safe-haven demand has been compromised by growing confidence in Covid-19 rollouts.

Consequently, demand for the safe-haven ‘Greenback’ has been limited by positive risk sentiment.

However, if the outlook for the US economy continues to improve, we could see the ‘Greenback’ sink lower this week.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) has been buoyed by a mixture of improving risk sentiment and rising oil prices.

With oil being one of Canada’s largest exports, demand for the ‘Loonie’ is steadily increasing.

New Zealand Dollar (NZD)

The risk-sensitive New Zealand Dollar (NZD) has also benefited from positive risk-sentiment, with hopes that the new Covid-19 vaccine rollouts could limit the spread of Covid-19 in the coming months.

Also, with China’s economy looking to improve this year, demand for the ‘Kiwi’ is steadily rising.

Australian Dollar (AUD)

The Australian Dollar (AUD) also benefited from positive risk sentiment today, with the risk-sensitive ‘Aussie’ gaining ground as the outlook for China – Australia’s largest trading partner – steadily improves.

As of Monday, 4th January 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1076, GBP USD exchange rate was 1.357, GBP AUD exchange rate was 1.7696, GBP NZD exchange rate was 1.8907, GBP CAD exchange rate was 1.7347, and GBP CNY exchange rate was 8.8568.
Dominic Lee About Author: (453 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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