The pound is stronger against both the euro and the dollar this morning after Governor of the Bank of England, Andrew Bailey, indicated that interest rates wouldn’t be cut in the coming weeks. There was speculation that the rate would move into negative territory due to the suffering UK economy.
The euro is stronger against the dollar, unfazed by the prospect of an extended lockdown in Germany. Meanwhile, the dollar has weakened as US Treasury yields, which have supported the greenback in recent days, have fallen.
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GBP: Vaccine hopes and Bailey comments strengthen pound
The pound is stronger this morning, strengthened by comments from Bank of England Governor, Andrew Bailey. He said that the interest rate would not be cut to 0% or lower over the coming weeks due to the prospect of economic recovery.
This comes as the vaccine rollout is underway. NHS England announced that 121,000 additional people received their first vaccine on January 10, taking the total of first doses to over 2 million. It is hoped that 15 million vulnerable people will have received their vaccine by February 15.
There are no economic data releases for the UK today. On Friday, however, industrial production and GDP figures will be released.
EUR: Euro unfazed by increased restrictions in Germany
The euro is weaker against the pound and stronger against the dollar this morning, unfazed by the German Chancellor’s announcement that the lockdown there could be extended. Angela Merkel warned that the lockdown may last for 8 to 10 weeks if the numbers don’t improve.
President of the European Central Bank, Christine Lagarde, will speak this morning. This will be followed by industrial production figures, which are expected to show a drop month-on-month in November.
USD: Dollar weaker as Treasury yields retreat
The dollar has weakened this morning as the previous support from US Treasury yields has drifted. It has also fallen due to comments from Federal Reserve officials suggesting that they will continue to support the economy with monetary policy.
Kansas City Federal Reserve President, Esther George, said yesterday that long-dormant inflation could rebound quickly as the economy shakes off the effects of the coronavirus pandemic. Inflation rate figures for December will be released later today.
Four more Federal Reserve officials are due to make speeches today, which could provide an indication of their next steps to help the US economy.
Yesterday, outgoing President Donald Trump was impeached for the second time. A trial will be held at the Senate to determine whether he will be ousted, however, it’s unclear whether this will happen before is tenure ends.