Stock markets advanced in the Asian session in risk on trade.
The notable drop in coronavirus infections in the UK could underpin the Pound. GBP/USD and GBP/JPY look to retest their January highs.
Risk appetite rose in the Asian session as investors looked ahead to President-elect Joe Biden’s inauguration and the Senate hearing for Treasury Secretary nominee Janet Yellen. Australia’s ASX 200, Japan’s Nikkei 225 and Hong Kong’s Hang Seng index, all rallied over 1%.
In FX markets, the risk-sensitive currencies AUD, NZD and NOK outperformed while the safe haven associated USD, CHF and JPY lost ground.
German and Eurozone ZEW Economic Sentiment and a speech from Bank of England Chief Economist Andy Haldane will be in focus.
Falling Covid Numbers to Underpin GBP
The notable drop in daily covid infections in the United Kingdom could underpin the British Pound in the near term. The strict lockdown measures are starting to have a meaningful impact on the infection rate.
Furthermore, one person in 20 is now vaccinated adding to the upbeat mood. That said, the viral daily growth rate remains above 2%, so numbers could still climb.
Technically, GBP/USD looks set to retest the yearly high set on January 14 (1.3711) as price holds above the 2019 high (1.3515) and the 34-day EMA.
GBP/JPY also looks set to continue pushing higher as the price soars past resistance-turned-support at the November high (140.31).