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Over the past couple of weeks, the pound has experienced dramatic swings in movement following the announcement of a Brexit deal as well as a new lockdown in England.

During this period, we’ve seen GBP/EUR fluctuate between €1.09 and €1.12 whilst EUR/GBP slipped back to £0.90.

Meanwhile, GBP/USD climbed just shy of $1.37 before slipping back to $1.34, at the same time that EUR/USD has fallen back from $1.22 to $1.21.

What’s been happening?

The pound received a boost in the last week of 2020 as an eleventh-hour Brexit trade deal between the UK and EU prompted a notable relief rally in Sterling.

However, we saw a large portion of these gains erased at the start of 2021 following the news that most parts of the UK would be going back into a strict lockdown.

The US dollar, meanwhile, has faced notable pressure as demand for the safe-haven currency was undermined by US stimulus hopes, although renewed coronavirus concerns have seen USD exchange rates begin to rally in recent days.

At the same time, the euro largely maintained its bullish run through the end of 2020 but has started to lose momentum at the start of 2021, amidst some gloomy data and rising coronavirus cases.

What do you need to look out for?

Looking ahead, any upside in the pound is likely to remain limited for the foreseeable future due to concerns over the economic impact of the new lockdown, particularly as the shadow of tougher restrictions looms large.

The euro could also face some hurdles in the coming weeks, amidst the spread of a more infectious stain of Covid-19 across the continent and concerns over the slow pace of vaccine rollouts in the EU.

For USD investors the focus looks to be on the incoming Biden administration, with hopes for more stimulus measures likely to help prop up market sentiment and weaken the US dollar.

Our friends at Currencies Direct

At Currencies Direct we’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Since 1996 we’ve helped more than 250,000 customers with their currency transfers, just pop into your local Currencies Direct branch or give us a call to find out more.

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