Currencies continue to trade in relatively tight ranges with investors also respecting the technical outlook.
Despite Sterling’s recent correction from the 1.1700 to 1.1800 zone against the Euro, there seems to be natural buying interest below the 1.1500 level having traded at 1.1480 several times over the last week. The Pound has recovered moderately across a broad base of currencies today, opening at EUR 1.1590 and USD 1.3890 as expectations of an economic rebound in the UK rise. This is supported by the successful long term vaccine program and the expected consumer spend when lockdown ends. This is likely to help positive economic data going forward. Major technical resistance is seen at EUR 1.1600 & USD 1.3900.
The Euro is under pressure, a combination of a slightly firmer Dollar across the board (with exception v GBP) following comments from Treasury Secretary Janet Yellen indicating higher U.S. interest rates are possible and Euro selling interest against the Pound. Nevertheless, there are signs of a rebound in economic activity in Germany as retail sales saw an aggressive rebound beating market consensus. The latest German manufacturing data however has just been reported as I write, this under hit market consensus albeit it only just. The Euro is now trading lower and below the key USD 1.2000 level (1.1990), having seen key resistance tested last week at USD 1.2100.
U.S. manufacturing PMI’s are due for release later this p.m.