13 January 2021
Sterling has strengthened this week, boosted by comments from BoE Governor Bailey, who downplayed the possibility of negative interest rates. He went on to say there are many issues with negative interest rates and it was too soon to reach a conclusion on further stimulus. The comments suggest the BoE will adopt a ‘wait and see’ approach with regard to how the economy reacts to Brexit and a third national lockdown.
In the US, small business confidence fell to a seven-month low, as the ongoing pandemic hits sales outlook and business conditions. Meanwhile, the Fed toned down talk of tapering its asset purchase program, and reiterated monetary policy will stay accommodative. This along with bullish sentiment in the equity markets further weighed on the safe-haven greenback.
Ahead today, the ECB publishes November Industrial Production figures. The ECB President, Lagarde, is also scheduled to speak. The US releases December inflation figures, with core annual inflation expected to stay steady at 1.6
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