Good morning,
Yesterday, we saw continued positive moves for the pound against the major currency pairs. GBPEUR hit a high of 1.1651 and GBPUSD got as high as 1.4216. The main driving factor behind this move seems to be the positive comments made by Gertjan Vlieghe. He has suggested a rate hike might be appropriate for the UK’s central bank next year should labour market continue to follow the current recovery pattern. A lot will hinge to the ability to get parts of the workforce off furlough which is intertwined with the vaccination programme. As it stands roughly 8% of the workforce is still furloughed compared to 20% back in January 2021. In the last week sterling is up 0.31% against the EUR and 0.25% against the U.S. Dollar.
Economic data out of the US was mostly positive yesterday with US jobless claims continuing to fall to a 406k vs 425k estimate, as well as core durable goods orders beating expectations. There are reports from the NYT that Biden will look to propose spending of $6 trillion in the 2022 fiscal year and total spending to rise to $8.2 trillion by 2031. Every week it seems the numbers go up and up for spending in the US which will continue to add pressure on inflation levels.
We are just over 3 weeks out from the 21st June deadline set by the government and cases appear to be on the rise with the number of daily cases yesterday at its highest since 12 April. The ‘Indian variant’ is set to become the dominant variant with a total of 6,959 cases confirmed in the UK, making up to 75% of new cases. Sterling strength has been driven by the falling deaths/cases of Covid 19 and we end this week with these numbers increasing. We have the bank holiday weekend kicking off later today here in the UK at a critical time for the Government. Next week’s Covid figures are to be closely watched with the 21st June target date almost in sight.
Have a great weekend. 
Josh Saunders, Senior Relationship Manager.
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