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Weekly roundup: Pound strength fades as economic doubts overshadow vaccine optimism

currency-newsWeekly roundup: Pound strength fades as economic doubts overshadow vaccine optimism
Support for the pound weakened over the course of the last week as the initial boost from the government’s lockdown exit plan announcement faded.
 
Worries over the outlook of the UK economy picked up in the face of news of growing delays at the UK border, something which could jeopardise the health of the manufacturing sector.
 
Confirmation that the unemployment rate climbed to 5.1% in December also put a dampener on GBP exchange rates, especially as the fourth quarter labour productivity data saw a sharp plunge.
 
While Bank of England (BoE) policymakers gave mixed messages on the UK’s inflation outlook on Friday, the pound still fell sharply due to end of month profit taking.
 
Any negative revision to February’s finalised UK services PMI could weigh heavily on GBP exchange rates this week.
 
As the service sector remains the primary growth engine of the UK economy, confirmation of another month of contraction may give investors fresh incentive to sell out of the pound.
 
The pound could fall further out of favour if the 2021 budget announcement fails to offer sufficient support to struggling businesses, amid fears of further economic casualties to come.
Philip McHugh

Philip McHugh

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)

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