GBP

Yesterday there was very little market news due to the US bank holiday Martin Luther King Day so the market was flat throughout the day. Boris Johnson told business leaders yesterday that efficient delivery of the coronavirus vaccine is Britain’s best economic recovery tool as he promised a sustainable fightback from the worst recession in 300 years.

The prime minister chaired the first meeting of a new business council designed to coordinate the government’s economic response to Covid-19 with leaders from the country’s biggest companies. Aiming to reassure business leaders that the government remained committed to kickstarting the economy as soon as possible. Johnson told the executives from 30 major firms – including GlaxoSmithKline, British Airways and HSBC – that the government was looking ahead to the economic recovery and the business landscape after Brexit.

Chancellor, Rishi Sunak, who also attended the meeting, told the leaders that effectively distributing the vaccine was the most important economic policy. Although no “big bang” removal of lockdown restrictions was expected, the chancellor suggested that vaccination would help to build a platform for a strong economic recovery in the second half of the year.

USD

Today Janet Yellen’s is expected to endorse a market-driven exchange rate which could lead to investors seeing it as a green light for the U.S. currency’s long-term downtrend.

The U.S. Treasury Secretary-designate will affirm the U.S.’s commitment to a market-determined dollar value on Tuesday, as reported by Wall Street Journal. The comments could fuel speculation authorities will not object to a weaker USD, which earlier this month fell to a two-year low against a basket major currencies.

Investors are already doubling up on bets that stand to make profit if the currency weakens further, emboldened by an incoming Democratic administration that is prepared to unleash more fiscal stimulus to help the economy recover.

Hedge funds have also boosted their net short positions to the highest in nearly three years in the last week according to data from the Commodity Futures Trading Commission. Meanwhile, they raised bullish bets on the pound to the most since October, and are wagering on the euro and the Australian and New Zealand currencies to rise.

Key announcements

09:00 – EUR- ECB Bank Lending Survey
10:00 – EUR – ZEW Survey- Economic Sentiment; expected to decrease to 45.5 from previous 54.4