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Pound (GBP) Rises After UK Regulator Approves New Covid-19 Vaccine

Published: 30 Dec at 4 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) rose today following the announcement that key UK regulator had approved the Oxford AstraZeneca Covid-19 vaccine.

As a result, Sterling investors are confident that the new vaccine, which requires a normal form of refrigeration and is easier to transport, could provide a lifeline for the British economy in coming weeks.

British Health Secretary, Matt Hancock, said that the new vaccine also promises a ‘route out’ of the Covid-19 crisis.

Meanwhile, GBP investors are growing more confident that the UK Parliament will accept the UK-EU trade deal.

Euro (EUR)

The Euro (EUR) is subdued today as fears continue to rise over Europe’s Covid-19 crisis, which is threatening to plunge several key economies into an extended period of lockdown.

However, the Euro has benefited from news that the EU and China had struck an investment deal.

A senior EU diplomat explains:

‘EU ambassadors broadly welcomed the latest progress in the EU-China talks. The council presidency concluded at the end of the meeting that no delegation had raised a stop sign and that the way for a political endorsement was thus cleared.’

Nevertheless, Brexit has thrown the Eurozone into a state of uncertainty, with the bloc now expected to shift its trading relations in 2021.

US Dollar (USD)

The US Dollar (USD) also struck lower this week following the announcement that the US House of Representatives had passed a bill to increase the US relief payments from $600 to $2,000.

Additionally, confidence is growing in the US stimulus package, which would aid the American economy’s recovery in the months ahead.

Consequently, demand for the safe-haven ‘Greenback has suffered, with new Covid-19 vaccine rollouts also weakening demand for USD.

In US economic data, today saw the release of December’s Chicago PMI data, which beat forecasts and rose to 59.5.

As a result, growing confidence in the American economy is dampening demand for the US Dollar.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) strengthened this week as oil prices rose on renewed optimism in US stimulus.

As a result, the oil-sensitive ‘Loonie’ is likely to perform strongly in the next few weeks as the US continues to press forward with its substantial Covid-19 relief package.

Australian Dollar (NZD)

The risk-sensitive Australian Dollar (AUD) also rose today as market optimism has boosted demand for riskier assets.

Any further indications of growing Covid-19 cases in Europe, however, could limit appeal for risky assets such as the ‘Aussie’ in the coming weeks.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) has also benefited from risk-on trade today, with growing hopes over US stimulus, Brexit, and a more promising Covid-19 vaccine buoying demand for the ‘Kiwi’.

As of Wednesday, 30th December 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1081, GBP USD exchange rate was 1.363, GBP AUD exchange rate was 1.7726, GBP NZD exchange rate was 1.889, GBP CAD exchange rate was 1.7379, and GBP CNY exchange rate was 8.8911.
Dominic Lee About Author: (474 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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