The pound reached a one-year high against the euro yesterday and is still trading at multi-month highs against the euro and the dollar this morning.
The UK’s vaccination programme, reduced expectations of negative interest rates and hopes of economic recovery are fuelling the pound’s strength.
As ever, the currency markets are unpredictable and it’s impossible to know how long this strength will last. Act now to take advantage of the strong pound and make sure any upcoming transactions are protected against the risks of sudden market movements.
GBP: Pound still at strong levels
The pound is still at strong levels against the euro and the dollar this morning, rising to multi-month highs against both. Sterling is the top performing G-10 currency of 2021 due to reduced expectations of a negative rate cut and an efficient vaccine programme which has fuelled hopes of a swift economic recovery in the UK.
Brexit concerns, which weighed on the pound towards the end of last year, have now faded into the background, allowing sterling to strengthen.
In his testimony to MPs of the Treasury Committee yesterday, Bank of England Governor, Andrew Bailey, said that the EU seems to want to take business out of the City of through forcing firms to relocate euro clearing business away from the UK. He labelled this a “very serious escalation”.
EUR: Sentiment figures to be released for Eurozone
The euro is weak against the pound this morning, but it is trying to gain some ground against the dollar.
The GfK Consumer Climate Indicator in Germany increased to -12.9 heading into March of 2021. Figures were better than market forecasts of -14.3, amid hopes the coronavirus lockdown could be eased soon.
Today there will be a series of data released for the Eurozone, including economic, industrial and services sentiment figures. All are expected to improve month-on-month in February.
USD: Powell continues with ‘dovish’ tone
The dollar is weaker this morning, failing to receive a push from higher treasury yields. This is possibly due to Federal Reserve Chair, Jerome Powell’s ‘dovish’ tone yesterday.
Testifying in front of the House of Representatives after his speech in the Senate the day before, Powell reiterated that the Fed would stick to their ultra-easy monetary policy for some time and wouldn’t adjust policy until the economy began to improve.
Today, durable goods orders and jobless claims figures will be released for the US.