The pound had a great week just gone, gaining against most major currencies throughout the course of the week. Despite Friday seeing the exchange rate drop against both the euro and dollar, over the week there were impressive gains in total, over 2% for GBPEUR and over 3% in total for GBPUSD. A reduction in Covid cases was a driving force behind an increased risk appetite in the market. Something which was also not spoken about too much, but gave the pound strength, was the announcement that the EU “has paused legal against the UK” over the “alleged” breaks in the deal surrounding the Northern Ireland legal text.
This Thursday will see the Bank of England’s Monetary Policy Committee meet to vote on interest rates, which could see some volatility heading in towards the latter half of the week. Although there is a general consensus within the market that rates will again remain at 0.1% for the coming period, there are concerns for how the following press conference will play out. Inflation forecasts are predicated to increase and GDP projection is at risk of a downgrade because of economic slowdown.
EURUSD has also had modest gains over the last week. As the dollar starts to lose ground because of a shift in sentiment, the euro has gained from the 3 monthly lows of last week. Data released this morning shows France’s manufacturing “remains robust” which is a theme across the continent.
Have a great day.
Jack Nicholls, Relationship Manager.
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