As covered in many of our market reports, the vaccine roll out has been a success here in the UK, and investment is reaching UK shores once more. As of last night, 42% of the UK population have received their first vaccine which equates to 24,453,221 people.
Governor of the Bank of England Andrew Bailey told the press yesterday that he expects the UK economy to recover to Pre-Covid levels by the end of the year. The Governor told BBC radio 4 that a large proportion of the UK have saved their earnings throughout lockdown and he expects the UK public to go on a spending spree throughout the summer.
Consumer spending is always seen as a good thing, however a concern for the Governor is that if we see a large increase in demand, inflation could rise sharply, and this is something the Bank of England will be keeping a close eye on. In addition, another concern for the Bank of England will be the unemployment numbers. At the start of July businesses will once more have to contribute, and this could lead to a sharp rise in unemployment.
On Thursday the UK are set to release their latest interest rate decision. No change is expected, however further guidance form the Governor can have a major impact on sterling exchange rates. If the Governor continues with the optimistic tone, we heard yesterday this could have a positive impact on exchange rates. However, some would argue that the positive tone by the Governor is a way of redirecting the spotlight. This week the Governor has been heavily criticised about his failing to supervise and regulate London Capital and Finance when he was the Chief Exec at the FCA.
As a Friday Portugal will be removed from the ‘Red list’ which means travellers from Portugal to the UK will not have to quarantine in a hotel, but instead can quarantine at home. Unfortunately for our clients that have a property in Portugal, the Portuguese have extended its ban on all commercial and private planes between mainland Portugal and the UK. In addition the earliest a holiday can be booked is the 17th May, however further guidance for clients with overseas property may be provided once the Portuguese deadline of the End of March expires.
Over the last couple of year Former Greek Finance minister Yanis Varoufakis has been vocal about his opinion on the European Union and it’s failings. Yesterday the Former Greek finance minister told the press that he believes the Eurozone will be ‘much much weaker’ and the Bloc’s recovery fund project will not help to bail out countries that have been majorly impacted by the pandemic. He went on to say the Fund project is mainly loans which is a real concern for countries that already have high debt levels such as Italy and Greece.
Since the start of the year the euro has been losing ground against the US dollar and Sterling. EURUSD has dropped by 2 ½ cents and EURGBP by 4 cents. For clients that are selling euros in the weeks and months to come, if we continue to see negative news from ex finance ministers such as Mr Varoufakis, this could cause further problems for the euro.
This afternoon the US are set to release their latest Retail Sales numbers. A steep decline for February is expected, which could put pressure on the Greenback. In addition, Wednesday afternoon the US are set to release their latest interest rate decision. Early market commentary is that the FED will announce that the $1.9 trillion Coronavirus fiscal relief package should help with economic growth, which should be seen as a positive for the US dollar.
In other news the US dollar has appeared to have gained ground in recent days due to its safe haven status. Across Europe many countries have now paused the use of the AstraZeneca vaccine, which is having a negative impact on investor confidence. In addition if Europe falls behind and large parts of the European Union remains in some form of lockdown economic growth will be impacted. As USDEUR is the most traded currency pair globally, when the euro devalues, we tend to see a rise in the US dollar.
The best in the business. I use FCD frequently and have absolutely no hesitation in recommending them to others. Pricing is immensely keen and front and back offices are highly efficient. Great all round service.
Good prices, efficient and friendly service – what more could one ask for.
Quick and efficient way of moving our money. Don’t have to worry about the money not being in our bank the following day. Having been using you for 10 years now.
I have absolutely no complaints about the services I have received from you. Every time I have used your services I have received complete satisfaction in every way. Excellent all the time.