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GBP/USD gained close to 0.4% last week
Sterling was boosted at the start of the week yesterday, gaining almost 1.5% against both the euro and US dollar.
Sterling’s success has been driven by local elections which cemented Boris Johnson’s power leading a centre-right Conservative government – and one that is spending a lot of money – while the Scottish Nationalist Party failed to win an outright majority.
Yesterday the UK government announced that Covid-19 curbs would continue to be eased as planned, with hospitality allowed indoors from next Monday.
Also in the political sphere, today we’ll see the state opening of Parliament, where the government looks likely to introduce measures to improve training in new skills as part of its agenda to support its “levelling up” agenda.
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GBP: GBP on upswing as Johnson sets out growth agenda
Sterling enjoyed another successful start to the week on the back of the local election results, further boosted by Halifax House Price data that showed a rise in house prices of 1.4% in the past month, 8.2% in the past year.
The pound exceeded $1.41 and its highest against the US dollar for three years, as US jobs data severely disappointed on Friday afternoon.
There are no significant data releases in the UK today, but the markets will be looking out for any surprises in the Queen’s Speech at midday. There is also a speech from Bank of England governor Andrew Bailey this afternoon.
Early tomorrow, look out for a raft of economic data including GDP and balance of trade figures.
EUR: Strong against dollar, weak vs pound
The euro largely held onto its gains against USD from Friday, while slipping against the pound yesterday by around 1%.
Yesterday we heard from ECB policymaker Francois Villeroy de Galhau that PEPP, the eurozone’s pandemic emergency purchase programme, would continue until at least March 2022, easing worries over a tapering of the support.
It’s a relatively quiet week for data in the Eurozone, but today we’ve already heard about wholesale prices in Germany continuing to rise, albeit at a slower rate than March, and later today we will see the ZEW index for Germany and the eurozone.
USD: Decline in dollar continues
Following the decline in dollar support after far worse than expected jobs data on Friday, the dollar continued to struggle against both EUR and GBP yesterday, reaching its lowest point against the pound for three years.
We have a series of speeches by Federal Reserve members today where they are expected to downplay worries over inflation and an overheating economy.
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