The pound gains ground

Sterling is on the front foot this morning, strengthening to over $1.37 against the dollar and also closing in on last week’s high against the euro trading at just under 88.5p. The single currency, meanwhile, is little changed against the dollar at the off at around $1.2150

European equity markets gained more than 1% yesterday but US stocks closed marginally lower on the day, while core bond yields were flat at just under 1.05% in the case of US 10-year yields and at about -0.55% in the case of German yields

The ECB is “looking deeper” into the euro’s recent appreciation against the dollar, according to a Bloomberg news report, with the central bank concerned about its impact on inflation

The IMF expects the global economy to grow by 5.5% this year after an unprecedented contraction of 3.5% in 2020, according to its latest forecasts, with GDP growth of 4.2% projected for 2022.

The IMF sees the US economy growing by 5.1% in 2021, an upward revision of 2% points from its October forecast, reflecting the sizeable fiscal stimulus passed by Congress in December, while the Euro Area economy is projected to grow by 4.2%, a downward revision of 1% point reflecting a “softening of activity toward the end of 2020, which is anticipated to continue into early 2021 amid rising infections and renewed lockdowns”

The Fed concludes its two day meeting today but is set to leave both interest rates and the pace of its bond purchases ($120bn per month) unchanged

Data due today includes capital goods orders in the US