08 Mar 2021
At the start of the second week of march, Goldman Sachs suggested that the Pound Sterling still has an opportunity to rise against the Euro. The GBP/EUR exchange rate was trading at 1.1613 whereas at 1.3814 against the U.S. Dollar.
"The UK economy is well-positioned for the coming recovery. The support program laid out by the government surprised consensus expectations to the upside and included a number of economic incentives aimed at medium-term investment,” Zach Pandl, economist at Goldman Sachs.
In the previous weeks, the Sterling was pressured by the U.S. Dollar which was dominating the foreign exchange market action. However, traders were relieved to hear Chancellor Rishi Rusnak’s announcement for a net giveaway adding another £65BN in spending, grants and tax breaks.
Moreover, the Pound Sterling to Australian Dollar was also trading higher on Monday, at 1.8054. The Aussie is currently hindered by the uncertainty of the equity market conditions. Additionally, Australia is also struggling with the rally of iron ore, its key export.
The Euro to USD is also set to stabilise following bond market inferno. The pair trades at 1.1911, as it hopes to overcome last week’s three-month lows.
Strategists said, "Price action will likely follow bond markets in the near term (at least) while vaccine sentiment continues to weigh on the EUR. Intermediate resistance is 1.1950 followed by the 1.20 mark. The EUR’s losses are flagging oversold on the Bollinger charts and nearing the mark in the RSI.”