GBP/USD has been on the back foot amid Britain’s new lockdown and a mixed reaction to US politics. The vaccine rollout and covid statistics stand out in the upcoming week which may get shots in the arm to sterling. The cable may also advance if US data remains weak and Powell signals more help, Yohay Elam an Analyst at FXStreet, reports.
Key quotes
“Exiting the lockdown is now more dependent on vaccines’ pace rather than covid statistics. The pound has room to rise if the immunization graph surges.”
“Chancellor of the Exchequer Rishi Sunak may introduce additional support to individuals and businesses amid the hardship caused by the lockdown after an initial package received a cold response by markets. Any substantial help could support sterling.”
“Andrew Bailey, Governor of the Bank of England, is scheduled to speak early in the week. Any hint of additional bond-buying – potentially to support further government spending – would boost the pound. This counterintuitive reaction of sterling rising despite printing more of it has been seen throughout 2020.”
“Similar to the UK, the pressure is mounting to increase the speed of the vaccination campaigns. Overall, markets want to see hospitalizations fall and vaccines rise. That would boost sentiment and weigh on the safe-haven dollar.”
“The highlight of the economic calendar is Thursday’s Retail Sales report. Consumption disappointed in November and likely picked up in December. However, the lack of government support last month probably contributed to another downbeat month.”
“Jerome Powell, Chairman of the Federal Reserve, will speak on Thursday and may comment on the recent job figures. If he further opens the door to more bond-buying, the dollar could fall.”
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