Currency Note

Markets await June 21 decision later today

By Christopher Nye June 14th, 2021

The pound is mostly trading around the same levels against the euro and the dollar ahead of the government’s official announcement on the June 21 ‘Freedom Day’, which will take place later today. Although it is largely expected that the current restrictions will stay in place for now, any surprises could have an impact on the pound.

In the US, the dollar has strengthened ahead of the Federal Reserve’s FOMC meeting minutes, which will be released on Wednesday. Investors will be looking out for any hints of when the Fed will begin to taper its current monetary policy.

It’s a busy week for economic data across the board, with Eurozone industrial production data due later today and UK inflation figures on Wednesday.

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GBP: June 21 delay priced in?

The pound is still trading around the same levels against the euro and the dollar to start the week. Although it has weakened slightly this morning ahead of the government’s official announcement about COVID-19 restrictions, it’s thought that this is largely priced into the market.

Government sources have said that the June 21 ‘reopening’ could be delayed by up to four weeks, which the Prime Minister is expected to confirm later in a press conference. The decision will then be put to a vote in the House of Commons this month.

It’s a busy week for economic data releases in the UK, with employment data tomorrow, inflation rate figures on Wednesday and retail sales on Friday. This data could reveal more about the Bank of England’s stance towards monetary policy. The Bank will release the minutes of their latest meeting next Thursday 24th.

GBP/USD chart over past year

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EUR: A busy week for data in Eurozone

The euro is mostly flat against the dollar this morning ahead of a busy week for data.

Industrial production figures will be released later this morning, followed by German inflation data tomorrow and Eurozone inflation data on Thursday.

This slew of data comes after the European Central Bank’s ‘dovish’ central bank meeting at the end of last week, when they didn’t provide any hints about when they would begin to taper monetary policy. President Christine Lagarde said it is “too early” to begin discussions on ending their Pandemic Emergency Purchase Programme.

USD: Dollar awaits direction from FOMC meeting

The dollar is stronger against a basket of currencies this morning ahead of the Federal Reserve’s FOMC meeting later this week.

During the meeting on Wednesday, we will hear Fed official’s latest thoughts on tapering monetary policy and economic projections. The release of economic data and comments from Fed officials over the past few weeks have caused investors to speculate over when the Fed will exit its ‘ultra-easy’ stance to monetary policy.

It’s a fairly busy week for economic data in the US, with retail sales due tomorrow and employment figures on Thursday.

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