Forex Today: UK becomes the center of the financial world

FXStreet Team FXStreet

Here is what you need to know on Monday, Tuesday 22:

Panic took over financial boards at the beginning of the week. The dollar appreciated sharply throughout the first half of the day but gave up most of its gains ahead of Wall Street’s close.

The dismal mood was triggered by the UK as PM Boris Johnson announced more restrictive measures following the discovery of a much more contagious covid strain. The negative sentiment cooled as the European Medicines Agency said that there’s no evidence that the just developed vaccines won’t work with the new coronavirus variant.

Additionally, there has been no progress in Brexit talks, but the opposite. Different UK authorities put into doubt the chances of a deal amid significant differences in fisheries. PM Johnson said that he would make a last-ditch push for a post-Brexit deal with a move on fisheries.

Meanwhile, the EU imposed a travel ban on the UK for 48 hours, while several other countries from around the world took similar measures.

On a positive note, US Senators agreed on a historic $900 billion coronavirus relief package and will vote on a proposed bill this Monday, alongside government funding for a whole year. The news was overshadowed by panic.

The GBP/USD pair plummeted to 1.3187 but recovered some ahead of the close on headlines indicating that the UK made a new proposal on fisheries and that EU leaders are looking into it. EUR/USD and AUD/USD were also able to trim most of their intraday losses, finishing the day not far below Friday’s closing levels.

Commodities also fell, with spot gold finishing the day below 1,880. WTI closed at around $48.00 a barrel.

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EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.