The past week has seen GBP take a beating on both sides of the price. Early in the week, Andrew Bailey set a hopeful tone for UK economic recovery in the latter part of the year, with an expectation for inflation levels to reach closer to the 2% BoE target in the coming months. This positive sentiment was short-lived however, in light of mounting legal action from the EU regarding the UK’s trading arrangements with Northern Ireland, which fall outside of the agreed divorce deal. Later in the week, vaccine supply issues in India threatened the UK’s vaccination drive which could potentially reverse some of GBP’s recent rally. Despite this, sterling has shown its resilience, with GBPEUR managing to push above the key 1.1700 barrier twice in the past week.
Following the BoE’s meeting this week, UK interest rates are to remain at 0.1% as expected with no change to stance on current monetary policy. It was judged by The Committee “that the existing stance of monetary policy remains appropriate”.
Across the pond, the US Federal Reserve are also remaining hopeful for economic recovery and hinted at US interest rates to remain flat into 2023.
Looking into the week ahead, Andrew Bailey will speak twice again on Tuesday and Thursday. Analysts and sterling traders will keep a keen ear open for any further sentiment on economic recovery or interest rates. UK CPI data is out on Wednesday with February’s inflation levels expected at 0.6%. UK monthly retail sales data is out on Friday, with monthly declines expected at -2.5%, following from January’s drop of -8.2%.
Have a great weekend ahead.
James Camp, Relationship Manager.
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