2/3/2021 9:47:26 AM GMT | By Dhwani Mehta
The UK has requested for an extension of a grace period until 2023 on trade checks that would be conducted between Northern Ireland and the rest of the Kingdom, BBC News reports, citing Cabinet Office Secretary Michael Gove’s letter to the European Commission’s Vice President Maros Sefcovic.
Reuters reported that the two sides had agreed a three-month grace period on checks on food goods being moved by supermarkets and some wholesale groups from Britain to Northern Ireland, as a part of the Brexit deal.
Market reaction
GBP/USD is wavering in a 20-pips range around 1.3650 over the last hour, digesting the upbeat UK Services PMI and positive vaccine developments amid a broad-based US dollar rebound.
At the time of writing the pair is currently trading at $1.3650.
US Dollar (USD) Rises as Global Markets Become More Cautious
The US Dollar rose today as global markets become increasing cautious over the coronavirus pandemic and the uncertainty over the size of the next Covid-19 stimulus package payment.
Congress have taken the first steps towards approving Joe Biden’s proposed $1.9 trillion stimulus package.
The US Dollar was supported by the publication of January’s ADP Employment Change data, private businesses in the US hired 174K workers in January of 2021, beating market forecasts of an increase of 49K.
The creation of new jobs in the US has furthered the case against the Joe Biden administration’s coronavirus stimulus package.
The Pound to New Zealand Dollar fell today, with the pairing currently fluctuating around NZ$1.90.
The New Zealand dollar rose today as risk-sentiment has improved following growing confidence in the United States announcing and passing its gigantic $1.9 trillion stimulus package.
Today saw the release of the latest New Zealand Global Dairy Trade Price Index, which rose by 1.8%.
Analysts at Agriland commented:
‘Butter milk powder (BMP) was the big winner at today’s event, recording a 10.7% rise in index. Butter, lactose (LAC), cheddar and whole milk powder (WMP) also performed strongly, recording index increases of 6.2%, 3.8%, 2.3% and 2.3% respectively.’
Consequently, confidence is growing in one of New Zealand’s largest commodities – dairy – as prices continue to bounce.
Pound under pressure, Services PMI next
February 2, 2021SharePrint
The British pound is in red territory on Tuesday. Currently, GDP/USD is trading at 1.3625, down 0.28% on the day.
Services PMI expected to slide
We’ll get a look at UK Services PMI for January on Wednesday (9:30 GMT). The initial estimate for the PMI showed a sharp drop to 38.8, down from 49.4 beforehand. The PMI has been in contraction territory since November, with readings below the neutral 50-level. This can be attributed to the lockdowns across the UK, in response to a surge in Covid-19 cases. Domestic economic activity has been curtailed, with the services sector hit hard by the health restrictions. The final release is expected to confirm the initial reading of 38.8, which would signify the deepest contraction since May, when Covid shut down large parts of the UK economy. There won’t be any surprises with this grim reading, but investors could nonetheless react in a surly fashion and send the pound to l
The pair is currently trading at around 1.2381.
Pound (GBP) Slips on Back of Data Releases
The Pound lost its footing this morning as disappointing data releases scuppered Sterling movement.
Although retail sales managed to edge to 0.3% in December from a -4.1% contraction in November, the figures missed the 1.2% forecast entirely.
The figures worried investors as the growth, albeit small, showed that despite being out of lockdown shoppers couldn’t be drawn to spend money, sparking concern for the economy.
Furthermore, the UK Services PMI fell sharply to 38.8 points in January, down from 49.4 in December.
Chris Williamson, Chief Business Economist at IHS Markit, said: