The pound has strengthened slightly against the euro this morning following the Prime Minister’s pledge yesterday to vaccinate “hundreds of thousands” of people a day in the UK from the middle of January. However, sterling has been weak overall since the start of the year as economic worries due to the pandemic continue to weigh.
In the US, the dollar has strengthened slightly this morning. Non-Farm Payrolls will be released later today, which serves as a significant indicator of how the US economy performed in December. The European Central Bank cited vaccine programmes as crucial for economic recovery in its Economic Bulletin yesterday.
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GBP: Pound up against euro
The pound has strengthened slightly against the euro this morning, possibly after Boris Johnson’s vaccine update yesterday. He made a pledge that more than 1000 GP-led sites in England will be able to offer a total of “hundreds of thousands” of jabs each day by January 15, saying that the army will be drafted in to help administer these.
Despite this, the current COVID-19 situation and worries over the UK economy remain, so again gains for the pound could be limited.
UK Construction PMI came in at 54.6 in December, little-changed from November and below market expectations, but showing that the sector is still growing. Increased construction activity primarily reflected another sharp rise in house building, while commercial activity eased.
EUR: ECB point to economic contraction at end of 2020
The euro is weaker against the dollar and the pound this morning, due to strength from both the greenback and sterling.
A series of data releases yesterday revealed that Eurozone inflation and retail sales fell in December and November. It was the biggest decline in retail trade since April, as both non-food products and food products dropped.
In its Economic Bulletin yesterday, the European Central Bank that economic data points to economic contraction at the end of 2020. They also said that the start of vaccinations supports expectations for a rapid recovery, but it will “take time” before the economy can return to normal.
USD: Dollar stronger ahead of Non-Farm Payrolls
The dollar has strengthened to its highest level in a week against the euro, benefitting from rising safe haven demand. This comes ahead of Non-Farm Payrolls data later today, which is a significant indicator of how the US economy performed in December.
US jobless claims released yesterday fell from 790 thousand to 787 thousand. Despite the declinel, claims remain well above pre-pandemic levels and will likely remain elevated for some time as the number of COVID-19 infections rise at record pace.
It’s predicted that Non-Farm Payrolls data will show that 71,000 jobs were added to the US economy in December, a fall from the previous 245,000.