Sterling Gains Despite New President Boost To US Dollar

The start of 2021 has sadly been much of the same on the global currency markets, with the world still gripped by the Covid pandemic and relative stasis on the economic front, causing little significant movement of interest.

Written exclusively for Expat Network by Tom Arnold of Currency Index

The biggest event of January was undoubtedly the US Presidential Inauguration, which went off without a hitch, with all of the conspiracy theorists guesses that Trump would somehow defy the November vote to stay in office, proved unfounded. President Biden is now in office and already a sense of stability or normality has returned to the US political arena. Focus has been put on rectifying the disastrous Covid strategy of the previous administration, and the US Dollar has been able to pull back some of its 2020 losses – gaining around 2 cents back against the Euro.

The Euro has struggled a little across the whole of January, with the EU’s failure to push on with a fast vaccine rollout, holding back any hopes for a short-term lockdown and a return to economic normality. Its disastrous attempt to use Northern Ireland as leverage in its row with the Pharma companies was short lived and showed a real desperation behind the scenes in Brussels. Sadly, for the EU it seems like their vaccine pathway is now fixed on the slow side, with vaccine production not unlimited and other countries ahead of the game. To go with its losses against the Dollar the Euro has also lost 3 cents against Sterling across January.

In the UK, the government has been under immense pressure to sort out the post-Brexit problems at the borders, but critically the UK is one of the countries leading the way on vaccine rollout, with over 10m people already having had their jabs. So, despite the Brexit issues still coming to light and the ongoing negotiations still needed with the EU, the Pound has managed to come out of January as the winner amongst the majors.  As mentioned 3 cents up against the Euro and 2 cents up against the Dollar, despite the Biden effect.  It has been a very positive month for Sterling.

The outlook for February is more of the same, with the dominant Covid situation still too serious to allow for any short-term likelihood of release for Europeans or Americans. The Eastern nations and Australasian countries, who have handled the Covid pandemic so much better, have already seen a return to something approaching normality and this is reflected in the strength of their currencies. The stronger Pound has managed to make some gains here, but even that is still a small dent in the massive gains AUD/NZD made during 2020.

Currency Index have been helping Brits make the move overseas for over a decade and have saved their client thousands of pounds along the way with their highly competitive exchange rates and bespoke currency strategies.