16 Nov 2020
Following the release of strong data coming from Asia paired with optimism revolving around a successful vaccine against COVID-19, the main currencies underwent several shifts at the start of the week.
On Monday, the dollar fell in value whereas both the British pound and the euro saw gains.
“In particular as the positive news about vaccine developers are providing a glimmer of hope at the end of the corona tunnel the FX market is likely to prefer an active fiscal reaction over inactivity,” Commerzbank strategist Ulrich Leuchtmann noted.
The sterling was also supported by hope about a potential deal between Britain and the European Union, encouraging investors to take risk. The UK currency settled at 1.3219 against the USD, and 89.75 against the Euro.
ING wrote to its clients, “While we see officials suggesting more than one week may still be needed, the technical time for ratification in the EU and UK is dangerously shrinking. In light of this, we could see both parts rushing into a deal already this week.”
The Euro was also on the rise, up by 0.3% to reach a one-week high of $1.1868.
On the other hand, the U.S. dollar fell by 0.2%, against a basket of currencies, reaching 92.573.
“If the end of the pandemic is foreseeable the tactic of pushing the European economies over lockdown with the help of fiscal policies makes sense again to FX traders.”