Date Published: 22/01/2021
ARCHIVED - Pound fluctuates on UK vaccination rollout and economic optimism TORFX Weekly exchange rate news
ARCHIVED ARTICLE Read our round up of the latest exchange rate news and plan your currency transfers for the right time.
Information provided by TorFX – 5 year winner of the Moneyfacts Consumer ‘International Money Transfer Provider of the Year’ (2016-2020)
Click here to request a free quote on your bank-to-bank currency transfers.
This week’s rates
Weekly Highs Weekly Lows
GBP/EUR €1.1318 €1.1207
GBP/USD $1.3739 $1.3527
EUR/GBP £0.8922 £0.8835
EUR/USD $1.2170 $1.2055
The Pound hit to an 8-month high against the Euro before retreating as UK vaccination optimism, lockdown and concerning economic data drove volatility in GBP.
Meanwhile, the Euro has been under pressure from rising coronavirus cases throughout Europe, and news that Germany – the Eurozone’s largest economy – will be extending its national lockdown.
What drove exchange rates this week?
Sterling made significant gains through the first part of this week’s session as UK markets welcomed the news that the nation’s rapid Covid-19 vaccine rollout could help the economy recover later this year.
However, Prime Minister Boris Johnson commented on Thursday that it was too early to say whether England would ease its nationwide lockdown next month.
As a result, GBP exchange rates relinquished earlier gains due to the threat an extended lockdown could have on the UK’s economic recovery.
The Pound fell further at the end of the week following the UK manufacturing and service sector PMIs, which revealed UK business activity declined at the fastest pace in eight months.
Meanwhile, the Euro suffered from rising Covid-19 cases throughout the Eurozone, which prompted Germany to extend its lockdown.
However, EUR exchange rates rallied later in the week after the European Central Bank (ECB) maintained its policy stance and gave an optimistic outlook for 2021.
The US Dollar weakened through the week as a risk-on market mood lowered safe-haven USD demand.
The upbeat market mood was driven by hopes that newly-elected President Joe Biden will push through a massive stimulus package and tackle increasingly worrying US coronavirus figures.
What could move exchange rates next week?
Euro investors will be awaiting Monday’s publication of the latest German Business Climate report for January.
Any improvement in the outlook for the Eurozone’s economy would boost the single currency.
However, if the Eurozone’s Covid-19 situation takes a turn for the worse, we could see the EUR/GBP exchange rate remain subdued.
Meanwhile, Sterling will be driven by the UK’s Covid-19 developments.
If the infection rate continues to drop and the UK’s vaccine rollout appears to be meeting targets, then we would see the Pound rise.
UK unemployment data will also be in focus next week, with any signs of rising unemployment proving GBP-negative.
US Dollar traders will be eyeing Wednesday’s interest rate decision from the Federal Reserve.
We could see safe-haven demand for the ‘Greenback’ begin to slip if the Fed is notably bullish in its outlook for the US economy.
If you need to move money to or from Spain, TorFX can help you save time and money on your currency transfers. They've been offering highly competitive exchange rates, no transfer fees and award-winning service since 2004. Click here to access their live exchange rates and find out how much you could save today.