Weekly currency market update from Hawk FX - 21 December, 2021

Dec 21 | 2020

GBP - Tier 4 restrictions imposed
The past week has seen further worrying COVID news, with cases continuing to rise sharply in many countries. Most worrying is the new strain that is prevalent in the South East of England. This strain appears to be far more transmissible and has led to much tighter Tier 4 restrictions. The understandable response from France, Ireland and others has been to restrict travel. However, this is likely to have a significant impact with goods not able to move between Kent ports and the continent.

GBP/EUR – 1.0954
GBP/USD – 1.3362

EUR - Brexit time running out
Markets have been optimistic that a trade deal will still be agreed before the end of the transition period. Despite some hopeful comments from negotiators, there are gaps between the two sides which are proving difficult to bridge. With negotiations having continued over the weekend, further talks are due today to decide if and how to continue the negotiations. There is also little time to pass any deal through parliaments.

EUR/USD – 1.2198
EUR/GBP – 0.9129

USD - COVID aid package agreed
US congressional leaders reached agreement on Sunday for a $900bn support package. This follows the $2.3bn package provided in March and comes whilst the pandemic appears to be accelerating in the US. Current restriction are looser across most of the US than Europe but with COVID cases still rising sharply, that position may change in the new year.

GBPUSD – 1.3362
EURUSD – 1.2198

21 December, 2020
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