The pound rallied on Monday as GBP investors welcomed the reopening of more of the UK economy.
Meanwhile, trade in the pound is mixed so far this morning, with GBP/EUR flat at €1.1561, whilst GBP/USD slides to $1.3885. GBP/CAD and GBP/AUD are rangebound at C$1.7612 and AU$1.7921 respectively, while GBP/NZD has rallied to NZ$1.9227.
Looking ahead, the focus this morning will be on the Eurozone’s consumer price index. Will another bump in inflation lift the euro?
What’s been happening?The US dollar remained in a position of relative strength at the start of this week’s session amidst rising hopes that President Biden’s $1.9 trillion stimulus package could soon be signed into law.
The bill now just needs to clear the Senate after being passed by the House of Representatives over the weekend.
Further bolstering the ‘Greenback’ was the latest ISM manufacturing PMI, which reported US factory growth accelerated to a three-year high last month.
This uptick in USD came at the expense of the euro, with the negative correlation in the pairing driving the single currency lower in spite of the Eurozone’s own manufacturing PMI figures beating expectations.
Meanwhile, the pound struggled to find to find support yesterday, amidst speculation that Chancellor Rishi Sunak’s upcoming budget could include some tax hikes following some hints from the Chancellor over the weekend.
However, ongoing optimism over the UK’s potential for a swift economic rebound in 2021 ensured any pullback in Sterling remained limited.
What’s coming up?Kicking off today’s session was the publication of Germany’s latest retail sales figures, where another contraction in sales growth looks to have put some pressure on the euro already.
However, the main focus for EUR investors today will be the Eurozone’s consumer price index, which could help to revive the euro on the expectation that inflation will have accelerated in February.
Meanwhile, we expect the pound to continue to trade flatly through today’s session as the impending budget is likely to limit the appetite for any aggressive bets from GBP investors.
Across the pond, the focus is likely to remain on the progress of Biden’s US stimulus package through the Senate, with USD investors optimistic on its chances of passing after the part regarding a raise to the minimum wage was dropped.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)