FX MARKET REPORT 14.01.2021
The GBP/USD pair has been torn between optimism about the UK vaccine rollout and US stimulus hopes. Economists at Credit Suisse anticipate the Bank of England will increase its assets purchases by a further GBP150 B at its 4 February meeting, continuing a policy of fully financing gilt issuance. But critically, and contrary to market pricing, they do not expect the BoE to opt for negative rates, given the potential threat this poses to bank profits and credit growth. It is expected that the EUR/GBP and GBP/USD pairs can reach 0.87/88 and 1.40, respectively. The UK vaccination campaign continues at full speed, hitting 4.52% of the population – the highest in the Western world. Investors are looking beyond the current misery and to the future. The faster a country inoculates its population, the quicker the economic recovery. EUR/USD remains stuck in the 1.2150 region on Thursday. The ECB will publish its Accounts of the December meeting. US weekly Claims, Powell will dictate the sentiment later in the session. The U.S. Dollar Index was down just 0.04% at 90.302, holding just above the 89.206 low seen for the first time since March 2018 last week. USD/JPY was up 0.1% at 104, while the risk-sensitive AUD/USD was up 0.3% at 0.7756.