The British pound couldn't maintain momentum and lost ground against both the US dollar and euro during Thursday's session in London. Currency strategists say that the market's optimism for the UK's government's roll-out of the coronavirus vaccine was likely overstated and, as a result, likely to result in disappointment when the numbers of infections and deaths keep creeping higher. The UK recently hit a sad milestone with 100,000 dead due to COVID-19, and the nation does suffer the fifth-highest number of deaths compared to the rest of the world. The government has issued lockdown orders, which are in place until March 8th in an effort to slow the spread. Because there is no clear path ahead, in terms of both the easing of restrictions and the control of the virus, and because the Bank of England may need to respond if the situation warrants, currency strategists are urging caution.
In London trading as of 11:21 am, the GBP/USD was trading at $1.3671, down 0.1242%, off the session peak of $1.37006. The GBP/JPY was trading at 142.56 yen, up 0.0856%; the pair has ranged from a low of 142.177 yen to a peak of 142.683 yen. The EUR/GBP was trading at 0.8854 pence, up 0.1108%, off the session low of 0.88359 pence.
Market Moving Data to Watch
Markets are waiting for the release of inflation data from Germany. Analysts recently polled are expecting to see the January number for the Harmonized Index of Consumer Prices rise to 0.5% from -0.7%, on a year-on-year basis. Later in the day, the US Labor Department will be releasing data on unemployment benefits. Economists are forecasting a slight drop in new claims for the week ended January 22, to 875,000 from 900,000, while continuing claims should be flat for the week ended January 15. Preliminary GDP is also due out later today, with analysts forecasting annualized GDP at 3.9%.