New COVID-19 strain found in UK, leading to more restrictions; sentiment shift helps the USD.
Both the euro and the pound sterling came under pressure as Forex traders sought the save haven currencies, especially the greenback and the Japanese yen. This move followed recent media reports that a new strain of COVID-19 has resulted in a widespread shutdown in the UK. As a consequence, in the days before the Christmas holiday, travel, international freight trade and Brexit talks have been halted, creating massive uncertainties. The UK government is hoping that they can convince EU leadership to create a way for a deal to be struck after the Brexit deadline; as of yet, there appear to be no signs of progress.
In London trading as of 11;20 am, the GBP/USD was trading lower at $1.3241, a loss of 2.0229% and well off the session peak of $1.35321, while the low was recorded at $1.31874. The EUR/GBP was trading at 0.9183 pence, a gain of 1.3104%; the pair has ranged from a trough of 0.90658 pence to a peak of 0.92182 pence. The GBP/JPY was down, trading at 137.4420 yen, a loss of 1.6013%, off the session high of 139.798 yen.
Sentiment Shift Helps Greenback
The US dollar is not only gaining support as a safe haven, but is also gaining on news that a second relief package for citizens and industries suffering in the wake of the coronavirus has finally been signed. News of a rollout program for the vaccine to prevent COVID-19 has also helped to shift sentiment. The numbers of infected and dead from the US as a result of the virus are the highest in the world. Currently, the EUR/USD is trading at $1.2159, down 0.7768%; the pair has ranged from $1.21295 to $1.22615 in today’s session.