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.

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