Pound rises as Bank of England unlikely to trim rates
Sterling rallied over the course of yesterday against both the USD and EUR. This continued this morning as GBP/EUR is trading over 1.12 and cable trading just below 1.37. Markets took comfort in comments from BoE Governor Bailey, who indicated it was too soon to cut interest rates again. Governor Bailey stated he is ‘willing to wait and assess the shape of the recovery’ before making any drastic decisions. His decision was also partly due to an acceleration in the UK vaccine roll out. NHS England announced that 2,080,820 people have already received their first dose. This is the highest, per 100 people, around Europe and the US. By mid February, the government aims to have vaccinated all over 80’s and those in the highest risk categories. This, in essence, should alleviate the majority of pressures the NHS is currently facing, thus allowing restrictions to be lifted.
While the plan sounds good, we will have to wait and see if the government can keep to their promise on this. Should they fulfil on this, and the pressure of the NHS is lifted, we could see the recovery for the UK economy happen much faster than anticipated. This may steer the BoE away from negative interest rates but in the meantime, sterling remains optimistic as more and more begin to get vaccinated.
Is time finally up for Donald Trump? It may look that way. Impeachment has become imminent again as a race from the Democrats has begun to remove him from office. Even prominent Republicans are calling for his head. Liz Cheney, the 3rd most senior Republican, agreed that the party ‘should vote to impeach Mr Trump’. The US house voted (223-205) to urge Vice President Pence to begin the 25th amendment process, but he has ruled this out.
It’s not just politicians that are looking to dump trump, a whole host of online services and even banks are cutting relationships with him over his involvement in last week’s incident. Most notably, Deutsche Bank announced it would no longer do business with Trump after propping up the Trump organisation for over two decades.
Finally, with only a week to go until Biden’s presidency, the stimulus package will be his first major action once in office. He has called for an increase to a $2,000 stimulus check amongst other things to provide Americans the support they have needed for months. Biden wants to seek a deal with the Republicans on COVID-19 relief, rather than attempting to push through legislation without their support. It seems this president will take a much more fair and reasonable approach compared to his predecessor.
- 09:00 GMT : ECB President Lagarde Speech
- 13:30 GMT : Consumer Price Index ex Food & Energy (MoM) (Dec)
- 13:30 GMT : Consumer Price Index ex Food & Energy (YoY)
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