Vaccine optimism and the shelving of the potential negative rates continue to drive the GBP higher.

The UK government yesterday announced that they have now met their initial target on the vaccine rollout. The UK stop markets surges close to 2% on the news. There is now a genuine belief that the UK will be better positioned for economic recovery than the European counterparts. This is reflected in the EURGBP cross rate which continues to grind lower. Price action has now breached the daily support zone and we expect this to continue on lower with the next meaningful support at the 0.8500 region.

The cable rate (GBPUSD) is also edging ever closer to the 1.40 milestone. The USD has been trading lower across the board as the safe-haven support dwindles as global stock markets indicate the ‘Risk on’ theme is here for a while.

The momentum meter chart shows us the clear strength and weakness of the main 8 currencies. The GBP is ahead by a country mile, followed by a really strong CAD which is following Oil prices higher. ‘Risk on” usually sees the commodity currencies, the CAD, AUD and NZD push trade higher to the detriment of the low and negative yielding currencies such as the JPY and CHF. So with ‘risk on’ theme the main driver of Forex this week we will be buying the aforementioned commodity currencies and selling the JPY,CHF and the USD in return. It makes for a trend continuation edge.