Sterling ha enjoyed gains against the US dollar as the UK’s economic data remains strong as well as the re-opening of indoor dining and the consistency of the vaccine rollout. The pound has also been increasing against the euro where it now finds support around the 1.16 mark again this was due to the UK’s economic re-opening, but it is still yet to reach the last month’s 12-month high of 1.18 which was achieved early last month. However, yesterday’s trading day sees the pound slightly bearish against the euro hitting the lows of 1.1571.
The easing of most of the restrictions has certainly added great optimism to the pound as we could see an increase of jobs circulating the economy. On Tuesday, the unemployment rate was released forecasting at 4.9% the same as the previous month. As it turns out, the unemployment rate has dropped by 0.1% bringing the figure down to 4.8%. This could be another sign that the UK economy is heading in the right direction which could have a great effect on the currency.
Other data that was released yesterday was the Consumer Price Index Data (CPI) which is the change in the price of goods and services purchased by consumers. This was forecasted to increase at around 1.5% from the previous 0.7% but ended up remaining the same.
As the pound continues to rally up following the easing of the restrictions, there is still one determining factor that could spoil the party as there is still a spike of cases of the Indian Variant which could have some effect on the economy and could delay lifting full restrictions to a later date.
There aren’t many economic data releases today which could cause major movements to the pound. However, tomorrow we will see the retails sales month-to-month data which the change in the total value of inflation-adjusted sales at the retail level. It is currently forecasted at 4.5% from the previous 5.4%
The slow vaccine rollout seen across Europe in the last few months has finally taken a impact on the economy. Quarterly GDP growth indicated that the EU economy shrunk in the second quarter of the year, which is very much different to the UK and the US who have seen bumper springs following lifting of restrictions and a speedy vaccine rollout.
Confusion surrounding 'Amber' countries has been a talking point in the last few days as the Government advises against people travelling for a significant reason to anywhere outside the green list. There is real optimism that the green list will start to get considerably bigger in the next few weeks. The EU today are set to provide information on the vaccine passport scheme which will allow tourists to travel to holiday destinations.
The European Union are trying to do their most to make sure that money can be sent pumped into the south of Europe by toursists as those economies have really struggled. If there isn’t a Summer to be had then it will be a wait until 2022 for those economies to get a boost.
The dollar continues to fall against its major counterparts. Yesterday the GBP/USD pair reached as high as 1.4220 and the EUR/USD pair reaching the heights of 1.2245 which equals the second all-time high same as what we saw back in February.
One of the key reasons why the dollar had a massive decrease against its major pairs was because of the price increase on industries that were affected by the pandemic. When the economy opened its doors back in April, many of the businesses that were affected by COVID-19 increased their prices as soon as they opened. Hotel prices and sports events increased by 8%, Air travel went up 10% and vehicle rental rose by 16%. These are the key determining factors that have contributed to the US inflation based on last month's figures.
Despite America's strong start to its economic recovery, seeing these figures could be the downside of President Biden’s $1.9 trillion stimulus package to keep the US economy running and to keep everyone from spending despite the crisis. As the US economy prints more money, the currency becomes less valuable. Which could potentially then lead to its weakness.
Today we will see the Unemployment claims data which will be released later, this will show the number of individuals who filed for unemployment insurance for the first time during the past week, and tomorrow we will see the data for PMI Manufacturing which is the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.
If you would like to keep up to date with any of these currencies, then please do not hesitate to contact your account manager for further information.
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