RationalFX : Pound Sterling had somewhat of a turbulent day yesterday but ultimately ended on what seems to be a stable ground.
Economic data did, however, show a worrying figure with nationwide housing prices reading at -0.3% from a previous 0.9%. This was the first drop for months and an area the Bank of England will not want to see struggle.
Having said this, sterling still remains supported. New Covid case numbers fell below 20,000 for a second day and while deaths still do remain high, the vaccination roll-out continues at a positive pace. Over 9.6 million people have now received their first dose with just under 500k receiving their second dose. Furthermore, yesterday the NHS announced that all older residents in eligible care homes have been offered the vaccine, with Boris Johnson quoted saying ‘we have reached a crucial milestone’. Theoretically this should elevate the enormous pressure that the NHS is currently under, meaning a return to normality could be sooner than anticipated.
We now look to the Bank of England as they announce their interest rate decision and monetary policy statement tomorrow. This will be key for sterling in the short term, with any indication of negative interest rates likely leading to pound sterling dropping off.
10:00 GMT: EUR Consumer Price Index – Core (YoY) (Jan)
13:45 GMT: USD ADP Employment Change (Jan)
15:00 GMT: USD Services PMI (Jan)
Source : ETFWorld.co.uk