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Pound Falls Against Dollar As UK Lockdown Seen Lasting Up to Easter

January 6, 2021 at 15:22 by Simon Mugo

Close-up of the UK pound note

The Sterling pound today fell against the dollar after initially inching higher when it became clear that the UK coronavirus lockdown could stretch up to Easter. The GBP/USD currency pair fell as market sentiment towards the pair shifted to bearish, causing a major selloff despite the relatively weak dollar.

The GBP/USD currency pair today fell from a high of 1.3671 in the early London market to a low of 1.3540 in the early American session but was off these lows at the time of writing.

The currency pair initially rose to new 2-day highs driven largely by the dollar’s weakness and the elevated risk appetite that boosted the riskier currencies at the dollar’s expense. Investors were concerned about the US Senate elections in Georgia that could give Joe Biden the power to implement most of his policies, which are viewed as being anti-business. Traders also seemed to shrug off the potential impact of the nationwide lockdown imposed by Prime Minister Boris Johnson. However, the mood changed when the Prime Minister told the House of Commons that the lockdown would be lifted at a snail’s pace with schools being the first to reopen at an indefinite date.

The pair got some reprieve after the Bank of England Governor Andrew Bailey said that about 5,000 to 7,000 UK finance jobs migrated to the EU due to Brexit. The currency pair did not benefit from the weak US ADP employment change report for December.

The currency pair’s future performance is likely to be affected by geopolitical events given tomorrow’s empty UK dockets.

The GBP/USD currency pair was trading at 1.3582 as at 15:21 GMT having fallen from a high of 1.3671. The GBP/JPY currency pair was trading at  140.29, having risen from a low of 139.76. 

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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