By Tom Arnold
Last week saw, for the first time in a while, some significant movement amongst the three major currencies, with Covid and economic factors both at the fore.
In the UK focus remains very firmly on today’s relaxing of Covid restrictions – the opening of the economy is a very positive step economically and coupled with Boris Johnsons’ “Levelling Up” speech last week, the Pound has been able to make some ground. It pushed up by around a cent on two separate occasions last week as a result of the positive backdrop, but sadly could not break through the recent market ceiling it has endured against the Euro. It did manage to reach rates not seen since April’s highs, but as then, it was not able to break through, with enough concerns remaining about rising Covid cases and a “forth wave” for the markets not to get too ahead of themselves. Both of the sallies made by the Pound were rebuffed, but rates remain close to the highs and so do provide a potentially good opportunity to secure your Euros.
The biggest mover in recent days has been the US Dollar, which has been able to gain strength as a result of its own Covid successes but also due to inflationary pressures, which have led to a feeling that interest rate rises might be coming in the not too distant future. Interest rate rises give a currency strength as they attract investment in that currency, and so the US Dollar has made ground against both the Pound and the Euro. The Federal Reserve have tempered some of this, by suggesting that the current inflationary pressures are simply transitory, but still the Dollar has been able to hold its gains.
The Euro has failed to make any moves of significance, largely due to no real big news economically or Covid-wise. The EU vaccine programme continues, but there are still widespread restrictions and with constant change to the travel rules, casting a cloud over the EU summer tourist industry, which is such a key economic factor for so many countries.
The week ahead is a busy one, with plenty of economic data out for the markets to digest. The biggest news is back loaded for Thursday and Friday with the ECB giving its monthly policy statement on Thursday, and then a raft of PMI data on Friday as well as UK retail sales.
UK House Price Index
Bank of England Haskel Speech
Reserve Bank of Australia Policy Meeting Minutes
European Central Bank Lending Survey
Australian Retail Sales
UK Public Sector Net Borrowing
European Central Bank Interest Rate + Policy Decision and Statement
EU Consumer Confidence
US Initial Jobless Claims
UK Retail Sales
UK Consumer Confidence
UK Manufacturing + Services PMI
EU Manufacturing + Services PMI
US Manufacturing + Services PMI
Canadian Retail Sales
As ever make sure to stay in close contact with A Place in the Sun Currency to be kept informed of what is happening on the markets and to discuss the options that are available to you, to make the very most of you upcoming currency requirement.