- GBP / USD has retraced from the session highs around 1.3750 and is back below 1.3700.
- However, volumes are declining as the weekend approaches.
Liquidity is dwindling and the news flow is slowing as a very hectic week draws to a close. The GBP/USD it is ending the session at the upper end of this week’s range and has just dipped south of the 1.3700 level, back from session highs around 1.3750. For the most part, trading has remained within a range of 1.3640-1.3750, in keeping with a widely indecisive tone seen in the currency markets.
GBP this week
The GBP has indeed been one of the best performing G10 currencies for the week, with GBP / USD being one of the only major G10 / USD pairs that is on track to end the week in the green. Some factors could have contributed to a slightly higher performance than the British pound;
1) The UK maintains a large advantage over most of its developed market peers in terms of the percentage of the population that has taken at least one hit from Covid-19, increasing the likelihood of a comparatively soon economic reopening that could make the UK economy outperform in 2021.
2) Vaccine delivery delays that have hit the EU so far have yet to hit the UK (although the EU could be on the verge of turning this issue into the UK by restricting exports of Pfizer vaccines from the factory from Belgium to the United Kingdom).
3) Infection rates in the UK continue to fall, with the latest figures showing infections at 29,000, well below the recent peak of close to 70,000 new confirmed infections per day, auguring a good outlook for a drop in the number of daily deaths and a reduction in pressure on health services in early February.
4) The markets continue to reduce their bets that the Bank of England will take interest rates into negative territory.
Driving the day
End-of-the-month flows looked like the dominant force in currency markets on Friday; While stocks fell, risk-sensitive currencies NOK, CAD and NZD managed to make decent gains. Typically, these coins would fall in line with stocks. Meanwhile, despite the stock market crash, the JPY was the hardest hit. The GBP seemed to largely avoid month-end volatility and did not have much action.
Technical Levels
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