Good afternoon,

The US Consumer Price Index takes front and centre in today’s packed economic calendar. After the sharp drop seen in March 2020, analysts expect a strong recovery. Should the figure disappoint, it may weaken the dollar, and support a beleaguered cable rate. Vice versa, if it comes in better than expected, we could see the downtrend continue.

The figure will draw wide attention, as inflation fears keep sending jitters throughout the bond market. The Fed’s Jerome Powell remained unperturbed in his Sunday speech, and reiterated that any inflationary pressures would be transitory, thus maintaining the dovish monetary stance. This means the greenback’s medium- to long term outlook is likely to remain subdued.

With the rollout of the Moderna vaccine officially beginning today, the UK marked another milestone in the vaccination program. This takes the total of different jab types in the arsenal to three, and could support the thesis of a broad domestic economic rebound. Long queues outside of pubs and high street shops seem to confirm the ‘pent-up demand’ which may lead to GBP’s outperformance versus other currencies later in the year.

Have a great day.

Thomas De Caluwé, Senior Relationship Manager

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