By Lauren Buckner
With Matt Hancock resigning from arguably the most important office role as Health Minister on Saturday following an admission of breaking his own government rules during UK lockdown volume III, the UK is once again faced with significant uncertainty around the coronavirus pandemic. Over the past 18 months Hancock has been instrumental in the NHS response to the virus and vaccination roll out (not without controversy) and it is a government role which has required steadfast dedication and agile thinking. At the time of writing GBP remained under some light pressure back at the lower end of the past weeks trading levels with both the EUR and USD.
With Sajid Javid now taking over the role, only 16 months after his shock exit as Chancellor of the Exchequer, he has commented that he would like to see “a return to normality as soon as possible” suggesting he knows that the disruption in such a key role is unsettling. Opposition parties have been quick to criticise the appointment with Javid being labelled as the “architect of austerity” which weakened the NHS in advance of the global pandemic.
The rise in case numbers continues in the UK with 11 deaths and almost 15,000 cases being reported on Sunday with a technical glitch being held responsible for less accurate than usual data, so the picture could be far worse. As the more transmissible Delta variant now dominates UK territory we continue to hope that the new ‘freedom day’ of July 19th does not start to be put under debate. The rise of the delta variant continues to cause global unrest with Australia being the latest territory to impose a tightening on policy as the virus continues to spread.
Good news last Thursday was the welcome addition of some of our readers more popular destinations being added to the UK greenlist. Majorca, Malta and Madeira are just three of the new additions for quarantine free travel but mainland Spain and France are still disappointingly missing. It is becoming more obvious that travel will continue to be disrupted and more expensive than usual due to the costs of testing, but this does give us a hopeful glance of better days ahead for all that look to spend time overseas! GBP was initially boosted on the back of the announcement and traded above 1.17 versus the EUR but the Bank of England announcement later in the day saw pressure return to the Pound as it was confirmed that any sign of an interest rate rise is still way off. This has lead to some incredibly tight trading conditions of less than a cent in GBP/EUR.
The main economic event this week is Friday’s Non-farm payrolls from the US. This measures the number of new jobs created (excluding agriculture) and has been way off of predictions in recent months. Last weeks inflation data from the US showed inflation at a 13 year high in the States at 3.9pc higher than the same month last year but has been pretty much shrugged off by the markets as concerns start to grow that the US economy may be whipping up the perfect inflationary storm with record low interest rates and extravagant spending as Joe Biden’s rescue plans are put to action.
As uncertainty both home and away starts to increase, the currency market will be searching for direction. GBP on the whole trades fairly well at the time which is of benefit to our clients with Sterling to sell. However, any shock events could cause the market to overreact where investors are so desperate to capitalise on any potential profits due to the lack of opportunity created in such a rangebound market. It would be prudent for anyone with a significant exposure in the coming months to reach out and make contact with us sooner rather than later so that we can talk through the different contract options available to you to protect your position and monitor the market on your behalf.
Data this week of note;
ECB’s President Lagarde speech
UK GDP (QoQ)Q1 – expected to hold at -1.5%
EU Retail sales – expected at a whopping 10.1%
US Manufacturing PMI – stable at 61.5
BofE’s Governor Bailey speech
US Non-farm Payrolls (Jun) – expected at 675k previous 559k