Joe Biden's meeting with GOP senators failed. Republicans remain dead set on their more modest $ 618 billion proposal, while the new US president is also firm on "injecting" another $ 1.9 trillion into the economy.

From the meeting, GOP senators said they are focusing more on the ongoing health crisis, noting that they want to give more modest aid in the form of $ 1,000-worth of direct payments. But Democrats, along with Joe Biden, are pushing for a larger package, as they believe that such will strengthen households and local governments.

The government wants to finish talks on additional stimulus before March this year, as that is when some aid programs expire.

In any case, Senator Susan Collins described the meeting as a frank and very rewarding conversation, mentioning that the US president revealed some details of his proposal. Collins also added that she was concerned about the plight of poor households, precarious small businesses and an overwhelmed healthcare system, calling for more action on the new economic aid package.

But so far, the only thing that Republicans and Democrats agree on is the need to allocate additional $ 160 billion. It will go towards more active vaccination of the population, as well as testing for coronavirus.

In another note, the US released a number of economic reports yesterday, one of which is business activity for the manufacturing sector. According to IHS Markit, the index accelerated at a very strong pace, but for ISM, growth slowed a bit.

In particular, IHS Markit said the index reached 59.2 points this January amid very strong consumer demand. It seems that increases in production and new orders provided significant support to the index, as was the easing some of the COVID-related restrictions.

Risks remain though amid supplier delays and supply chain disruptions.

As for the report of ISM, business activity fell to 58.7 points, which is 1.8 points lower than the December value (60.5 points). Despite this, the indicator shows that the economy is growing continuously, after the last contraction in March 2020. Index for new orders was 61.1 points, while the production index was at 60.7 points.

With regards to EUR / USD, bears are still working for a break below 1.2050, while the bulls are attempting to get the market back under their control. However, the bull market will only return if the quote breaks above 1.2140, as such will open the way towards 1.2180 and 1.2130.

The latest COT report also indicates increasing interest in the European currency, especially amid declines and corrections from yearly highs. In fact, long non-commercial positions have increased from 236,533 to 238,099, while short non-commercial positions decreased from 73,067 to 72,755. Due to continued growth in long positions, the total non-commercial net position rose to 165,344, from 163 466 weeks earlier.

GBP / USD

Pound traded sideways today, after falling a little bit yesterday. Nonetheless, the upward potential remains, especially amid good news on COVID-19 vaccines, as well as Boris Johnson's promise that he will not raise payroll and sales taxes next month. According to people close to the prime minister, Johnson is also not going to receive additional income to combat the record growth of deficit, which occurred during the coronavirus pandemic.

US Treasury Secretary Rishi Sunak was the one who revealed the news. However, in March, the UK budget will be formed, so the government may start to take action on the record deficits that have accumulated and will certainly continue to accumulate.

As for GBP / USD, the break above 1.3755 will certainly lead to a sharp rise towards the 38th figure. In particular, to 1.3880 and 1.3960. But if the quote consolidates below the 36th figure, EUR / USD will collapse to 1.3530, and then to 1.3460.

The latest COT report indicates a slight advantage for pound sellers, which may mean that the bears are planning to break the lower border of the side channel, especially after unsuccessful attempts to rise above the yearly highs. Long non-commercial positions have increased from 45 904 to 47 360, while short non-commercial positions jumped from 32 199 to 39 395. As a result of this, the non-profit net position decreased to 7,965 from 13,705 a week earlier.