UK lockdown reverses pound’s Brexit deal gains

  • UK lockdown reverses pound’s Brexit deal gains

     

    Over the past couple of weeks, the pound has experienced dramatic swings in movement following the announcement of a Brexit deal as well as a new lockdown in England.

     

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    During this period, we’ve seen GBP/EUR fluctuate between €1.09 and €1.12 whilst EUR/GBP slipped back to £0.90.

    Meanwhile, GBP/USD climbed just shy of $1.37 before slipping back to $1.34, at the same time that EUR/USD has fallen back from $1.22 to $1.21.

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

     

    What’s been happening?

    The pound received a boost in the last week of 2020 as an eleventh-hour Brexit trade deal between the UK and EU prompted a notable relief rally in Sterling.

    However, we saw a large portion of these gains erased at the start of 2021 following the news that most parts of the UK would be going back into a strict lockdown.

    The US dollar, meanwhile, has faced notable pressure as demand for the safe-haven currency was undermined by US stimulus hopes, although renewed coronavirus concerns have seen USD exchange rates begin to rally in recent days. 

    At the same time, the euro largely maintained its bullish run through the end of 2020 but has started to lose momentum at the start of 2021, amidst some gloomy data and rising coronavirus cases.

     

    What do you need to look out for? 

    Looking ahead, any upside in the pound is likely to remain limited for the foreseeable future due to concerns over the economic impact of the new lockdown, particularly as the shadow of tougher restrictions looms large. 

    The euro could also face some hurdles in the coming weeks, amidst the spread of a more infectious stain of Covid-19 across the continent and concerns over the slow pace of vaccine rollouts in the EU.

    For USD investors the focus looks to be on the incoming Biden administration, with hopes for more stimulus measures likely to help prop up market sentiment and weaken the US dollar.

     

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