As mentioned a little while ago, what goes up must come down, and that continues to be the case for the pound. Despite starting the morning gaining marginally against both the euro and dollar, the previous few weeks have painted a pretty bleak picture for sterling. After hitting a yearly high during August, performance against the single currency has faltered as the euro made a solid come back. Against the dollar the euro has also made an impressive comeback after reaching a near yearly low during August. The euro has been the standout performer after the Fed knocked back rumours of an interest rate rise and a reduction in quantitative easing, following drastic action as the Covid pandemic hit in early 2020. As we know, interest rates are the main driver in currency markets and any hint to the improved picture in the States should have been the key to the dollar reigning supreme.
Looking back at pound performance against the dollar, the rate currently sits over 3.5% lower than the June high of 1.4250. With little in the way of data released from the UK over the course of the week it could be poor data releases elsewhere which breathes life into the pound. The standout release of the week, as with every first Friday of the month, will see US nonfarm payroll figures released. Also, on Friday the Eurozone will release retail sales data figures. The year on year data will be a key indicator for recovery after the Covid pandemic, following the rollout of the vaccine programme.
Have a great day.
Jack Nicholls, Senior Relationship Manager.
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