The pound to euro looks like it is going to continue its impressive rise; however, the news might not be the same for the GBPUSD pair with the greenbacks growing strength and with CPI data coming out later in the week the pounds high ground against the dollar could be compromised in the coming weeks.
Goldman Sachs was speaking yesterday about their thoughts on the pound continuing its rise after last week's budget reports being more supportive than many investors were led to believe before the announcement and offered a more generous support package for the UKs future economic outlook.
Andrew Bailey spoke yesterday about the future of the economy and his thoughts about what the future might hold, he does not believe that the UK economy will be able to recover to the same levels they were pre covid pandemic due to the change in spending and working habits. He also says that he and his team are working on their future plans with consideration for both an interest rate hike and a potential drop below the 0% mark. Bailey believes that overall, there is a lot of economic positivity and consumer and business positivity and with covid numbers dropping and vaccinations rising there is all the chance for the economy to rise which in turn would take the pounds value with it.
The euro has had a rough few week with little positive news coming out after issues with economies, lockdowns and slow vaccination numbers, things may be on the up for a few countries as there has been words from both Spain and Portugal about Brits travelling over to their countries. Spain welcomes 18 million visitors a year and Portugal 3 million and with Brits being allowed to travel almost restriction free between the 2 countries with Spain supposedly asking for a negative test on arrival and the Portuguese asking for either a negative test or proof of both doses of the vaccine. This will make a change from the mandatory stay in a hotel after returning from a trip abroad.
With more countries allowing visitors it could cause the euro to gain some strength further down the line with more people booking holidays and buying their holiday currency, as seen last year in June when people started to travel more the pound started to slip as the euro gaining its value all be it briefly. Although, with a travel ban in place the value of the euro will have to rely on other sources of stimulus to fight back against the climbing pound.
Tomorrow we are due to see the Bureau of Labour statistics release the month on month Consumer price index numbers for the last month, this number can be very influential on the strength of the USD as it is a good indicator of inflation over the last month and what the next month might have in store. A rise in predicted from 0.3% to 0.4% which could be a catalyst for the USD as the previous 3 months have either been stagnant or a decrease. The dollar has seemed to have all the good news on its side with the non-farm payroll coming out a lot more positive than was expected on Friday and the 1.9 trillion dollar stimulus package acceptance over the weekend saw the USD gain strength over many of its currency pairings and with little news coming out the United States there looks like very little on the horizon to stop it. If you have a USD transaction in the near future, please get in touch with your account manager to make sure you are on top of any changes as they happen.
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