End of Quarter 1 – Market Update

By Simon Eastman

The pound had a more deflated stance last week, seeing weakness across all the major currencies as concerns over the vaccine rollout emerged.

With the EU having issues with delivering and threatening to stop exports of vaccines outside the Bloc, the gusto with which the UK has been rolling our delivery out came under threat. Its still expected we should see some disruption and we must bear this in mind as we move into April, as it could have further disadvantages for sterling.

Sterling did make the losses back on Friday though, leaving us pretty much back where we had been. Surprising, given Bank of England member Tenreyro announcing the Bank can foresee a few scenarios where looser monetary policy could be required, citing the extension of the furlough scheme as one such reason. Looser policy, is to encourage spending, so the chances of interest rates moving up are less likely, which generally result in a weaker currency (lower interest rates mean low returns, giving investors less reason to buy up the currency, keeping it weak from low demand).

As we move to the end of Q1, the start of Q2 and the Easter bank holiday weekend, we have a number of economic releases, outlined below which could have influence. What will be key, is how Covid influences in the guise of the European third wave and the impact of UK vaccine availability, on the continued rollout of our program.

The Week Ahead

Tuesday – German inflation figures.

Wednesday – UK  GDP, EU inflation, US employment change, Canadian GDP.

Thursday – Australian retail sales & trade balance, German & Swiss retail sales, German, EU, UK, Canadian & US  manufacturing PMI

Good Friday – UK & EU Bank Holiday. US Non-farm payroll, average earnings and unemployment rate.

Plenty to make the markets move, especially given the end of Q1 is likely to see some positions wound up and profits taken, so expect some volatility as the month draws to a close mid-week. To avoid any pitfalls, call our experienced consultants today to discuss your upcoming requirements.