Just when everyone thought that the Euro would be responsible for most of the trading action this week due to the awfully long negotiations at the EU Summit, the British Pound (GBP) stole the show. It advanced across the dashboard, gaining against all other fiat currencies on the back of extremely good news from Oxford regarding a COVID-19 vaccine.
The results of the study indicate that the vaccine is safe, induces immune reaction, and the preliminary results conducted on over a thousand patients are very promising. If the vaccine effectively protects against infection, is yet to be revealed by different studies, but at this point, it seems to be the best humankind came across in terms of a solution to fight the coronavirus health crisis.
GBP Soaring on the Oxford Vaccine Potential News
As always, the currency market is the first one to react to such news. Currency traders have a forward-looking attitude, and every exchange rate bearing the GBP symbol was on the move at the start of the trading week.
The GBPUSD fully reversed last week’s losses in a single trading day, and the GBPCHF squeezed higher postings and an endless series of green hourly candlesticks. Perhaps the most impressive market move was seen on the EURGBP cross. With the Euro trading with a bid tone due to the optimism that EU leaders will reach a deal on the size of the loans and grants part of the Recovery Fund, the Euro traded with a bid tone since the launch of the fund was announced over a month ago.
Yesterday, on the verge of the EU Summit testimony, the Euro was not strong enough to gain against the GBP. Instead, it dropped like a rock, coming down from a maximum of 0.9040 ahead of the London session to almost 0.90 in the aftermath of the Oxford vaccine news.
News about potential vaccines have the potential to move financial markets. It is not the first time when it happens. A little over a month ago, the US equity markets rose, triggering a risk-on move across all other financial assets, on positive developments from Moderna, a US biotech company, on a COVID-19 vaccine.
Moving forward, the race against time to develop a vaccine is likely to keep influencing volatility. We will find out soon enough if yesterday’s rally was by chance or GBP bulls are here for the long run.