Good morning,

GBP has continued to slide and dropped another 0.2% during trading yesterday, with lows of 1.4005 and 1.1604 against the USD and EUR respectively. A surge in US consumer prices, a further indication that inflation is rising in the United States, has fuelled the fire around speculations the Fed will raise interest rates sooner rather than later. This, along with an extended selloff in equity markets, has benefitted the USD’s relative safe haven status.

In contrast the Andrew Bailey, spoke yesterday and mentioned he does not think the situation with low interest rates is going to change markedly. He also noted that there are no prospects for an agreement with the EU on post-Brexit equivalence rules for financial services, with the deal being blocked by France with tensions around fisheries.

Concerns mount at Westminster around the Indian variant of Covid, as with the possibility that it may spread quicker, the numbers rising and the unlocking from Monday in England, the variant spread could accelerate. Speaking yesterday the Prime Minister mentioned he was “anxious” and “ruling out nothing” to tackle it, including reintroducing regional restrictions.

Later today US Retail Sales are released and will be the key driver for sentiment as we head into the weekend.

Have a great day.

Joseph Sidders, Relationship Manager.

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