Weekly Market Roundup - Bank of England hopeful that UK economy will 'recover rapidly'

This week the Dollar continued to strengthen its safe-haven gains as the Federal Reserve stated fresh concerns about the economy. With market risk appetite stagnating, this increase for the dollar as the world’s safe-haven asset could continue to rise. Meanwhile President Biden is pushing forwards with his $1.9 trillion stimulus package for the economy.

Sterling was struggling with its momentum ahead of the Bank of England’s (BoE) latest rate decision, hitting a 2 week low of $1.35. However, Sterling bounced up to $1.36 after the BoE’s announced they would be holding interest rates at 0.01% for the time being, and that a move to negative rates is off the cards for now.. The BoE also stated that the UK economy will ‘recover rapidly’ as vaccines are rolled out and restrictions are lifted. However, the next few weeks may be tough as lockdown measures continue. The BoE are hopeful that the economy will return o pre-Covid levels by early next year at the latest. Despite the pound’s rally, the FTSE100 closed 4 points down, hovering just above 6,500.

The Eurozone experienced a contraction of 0.7% in the fourth quarter, showing the potential for a double-dip recession to be down the path. Despite this, the Euro showed some support due to a positive German inflation reading and an optimistic unemployment rate that held at 6%. EUR/USD currently trades at 1.19, whilst GBP/EUR remains stable at 1.14.

In other news it looks like the GameStop saga of the retail investor vs Wall Street may be coming to an end. Last week the stock rocketed momentarily above $450. However, many trading platforms including the likes of Robinhood and Trading212 halted buying, allowing customers to only sell their stock, which some believe to be the reason for the crash down to the sub 60 levels. The SEC declared that they seek to investigate potential manipulation on the Reddit forum that called for the stock’s rise, whilst many cry out for the finger to be pointed in the other direction. GameStop short sellers have lost upwards of $13 billion this year.

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