GBPUSD Contained Near Weekly Tops After Key UK Data
15 Jan 2021 · 3rd Party Analysis
- The UK’s economy fares better than anticipated
- Larger numbers of people vaccinated
The GBPUSD pair is trading near its weekly tops around the 1.3700 mark. The exchange rate was supported by the bulls this week even against a stronger US dollar across the board. On Thursday, as the US dollar showed signs of appreciation against the euro, the sterling was able to close at its weekly top against the greenback. The GBPUSD yesterday closed at 1.3692 with a high of 1.3711. A slight pullback is seen after the opening of the European session on Friday as market participants digest the latest economic data coming from the UK.
As it became clear earlier, UK GDP arrived at -2.6% MoM in Nov vs -5.7% expected. In other words, the British economy shrank by 2.6% in November, which is better than the expected number of 5.7%. Additionally, the trade balance arrived short at -16.01B for November, significantly lower than the forecast of -10.18B and the previous number of -13.29B. The UK’s manufacturing production rose 0.7% MoM in November vs the expected 0.9%. The data reflects a month-long lockdown in England with many businesses closed. The contraction was considerably milder than the 20% witnessed in April.
The data release did not have an immediate effect on the GBPUSD pair as it continued to float around the 1.3670 levels. The cable this week is a strong winner so far as the European session opened on Friday. The GBPUSD is up 1.80% from Monday’s low of 1.3451 to the current market price of 1.3670. In light of today’s data, the UK Finance Minister Rishi Sunak said the November GDP report highlights “the scale of the challenge we face”. He also expressed confidence that the situation will improve as “there are reasons to be hopeful, vaccine roll-out is underway”.
Increased Optimism in the UK
There is an increased dose of optimism around the coronavirus situation in the UK, which is also a factor that plays a role in the support of the British currency. The UK is one of the top ten countries by total vaccinations. The latest report by the NHS shows that a total of nearly 2.4 million people have been vaccinated by January 10. For the first ten days of January, more people have received the vaccine than in the entirety of December. The number includes more than 30% of one of the priority groups, people over 80 years of age.
A document released by the Scottish government suggests that Britain could have enough coronavirus vaccines for over 500,000 people for each day in the coming week. After the reveal, Health Secretary Matt Hancock, reacted in discontent to the fact that information about the latest vaccine supply by pharmaceutical companies was concealed in a bid to reduce pressure from other countries on these companies. The document, which has now been withdrawn from the Scottish government’s website, also showed that an increased supply of the vaccines by Pfizer, AstraZeneca, and Moderna is set to arrive in the UK by the early summer.
Scotland, which represents around 8% of the UK’s population, is expected to reach the milestone of 1 million people vaccinated by the middle of February. By that time, according to the government’s vaccination program, a total of 15 million people should have received their first jab across the UK.