Weekly currency market update from Hawk FX - 1 February, 2021

Feb 01 | 2021

GBP - Bank of England to hold rates
The Bank of England policy update will be a key focus for UK financial markets. The Bank will also update its forecasts and issue its quarterly Monetary Policy Report. Markets expect rates to be left on hold at 0.1% with the target level for asset purchases at £895bn. The MPC is likely to wait to see what further measures are taken by the government before deciding on further action. Further stimulus may also have little impact while much of the economy is still in lockdown.

EUR - Vaccine woes to affect data
Europe continues to battle to ensure the vaccine programme is moving ahead at pace. The slow rate of progress across the bloc has led to criticism of producing companies by member governments and threats of restraints on vaccine exports. Equities had their worst week since October on the back of concerns over the ongoing economic impact.

USD - Non-Farm payrolls to rise after December drop
The US Federal Reserve left monetary policy unchanged at its latest update last week. Chair of the US Fed Powell commented that economic activity has moderated, particularly in those areas most affected by the pandemic. Fourth-quarter GDP data showed the economy still growing (4%) but at a much slower pace than in the third quarter. Risks for most economies still seem prone to worsening data with the severe restrictions that remain in place.

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