Currency Note

Pound strong ahead of further easing of restrictions

By Christopher Nye May 14th, 2021

The pound is still strong against both the euro and the dollar this morning as England prepares to open up further from Monday.

Boris Johnson has said he is “anxious” about the Indian variant of Covid-19 and would not rule anything out to contain its spread.

The euro felt the pressure of the positive US data yesterday, but has since gained back some strength. Markets will be listening out for any dovish comments in the minutes of the latest European Central Bank meeting.

US unemployment levels are the lowest since the start of the pandemic. Retail sales figures will be released later today.

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GBP: UK could “top G7 growth league table”

Sterling remains strong against both the euro and the dollar this morning as England prepares to open up further from Monday.

Speaking yesterday, Bank of England chief economist, Andy Haldane, said that the UK’s economic recovery could “put it at the top of the G7 growth league table”. He also maintained his stance on the BoE reducing its bond-buying programme and expressed his concerns around inflation, saying “the inflation genie is notoriously difficult to get back in”.

Boris Johnson has said he is “anxious” about the Indian Covid-19 variant and would not rule anything out to contain it, a change in tone from his optimism earlier this week.

Nadhim Zahawi, the UK’s vaccine minister, said that the UK may start offering jabs to areas and age groups where it is needed most, such as to younger people in places where the Indian variant is spreading most quickly.

GBP/USD chart

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EUR: Markets eye ECB meeting minutes

The euro has gained back some ground against the dollar after positive data releases in the US caused the single currency to weaken yesterday.

Minutes from the European Central Bank’s latest meeting will be released later today. The ECB is not expected to change its monetary policy, but markets will be looking out for any dovish comments.

Spanish inflation rose 2.2% year-on-year, meeting market expectations. Next week, we will see quite a few data releases for the eurozone including balance of trade figures, employment change and GDP growth rate estimates for Q2.

USD: US unemployment sees new pandemic low

For the second week in a row, US initial jobless claims are at levels not seen since before the pandemic. The new pandemic low of 473,000 indicates that the US businesses are recovering.

US producer prices surged 6.2% year-on-year, beating market expectations. Later today, we will see retail sales figures as well as data for industrial and manufacturing production.

President Biden has announced that Americans who are fully vaccinated no longer need to wear masks in most indoor and outdoor settings.

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