Good morning,

Yesterday saw the release of the FOMC (Federal Open Market Committee) minutes, and with that a slight drop off in the GBP/USD rate, although cable stabilised, and after a move of nearly 1% remained firmly trading within the 1.41 range. Following the publication of said minutes, the EUR also suffered some sharp losses moving 0.8% against the dollar off of the back of some hopeful comments and positive sentiment regarding the recovery of the US economy – trading back in the 1.2190 range at time of writing.

After a strong start to 2021, analysts at Deutsche Bank foresee difficulties for the British pound, predicting a less than overwhelming economic recovery if the emergence of the new variant is not kept under control. This paired with the potential for disappointment from the Bank of England when the time comes for an interest rate hike has led to some mixed feelings on the future of the pound, with some analysts favouring the euro. This in turn could hint towards some April like losses for the pound against the euro, but only time will tell.

Whilst the threat of a new Covid variant continues to loom overhead, the UK is preparing for this by ramping up its surge testing capabilities in areas most affected by the so called “Indian variant”. In a move to make sure that nothing halts a full reopening of the economy, the government is rolling out a new study of 3,000 people to ascertain the effectiveness of administering a third dose of the vaccination.

Have a great day.

Holly Tobia-Parkyn, Relationship Manager.

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