Sterling claws back some ground on the Euro

By Ashley Finill

Last week saw sterling gain back some ground on the Euro. This claw back for the pound follows the losses seen at the start of February due to political uncertainty in the UK as Boris Johnson has so far escaped a mass exodus from the Conservative party as once feared/reported. These gains for Sterling have presented a great opportunity to buy Euros as we edge closer to the best levels seen since the start of the pandemic, however buyers of the Euro should remain cautious if holding out for further improvements for Sterling as investigations are still ongoing and should news break of wrongdoing at number 10 and the saga of no confidence ensues then this could spell bad news for the Pound and could leave you caught out by the unforgiving currency market at a moment’s notice, as we witnessed only a few weeks ago. Attention has now been diverted to tension in eastern Europe as Russia continues to build its forces around the Ukrainian border as a threat of invasion is more likely as the days push on. Yesterday afternoon the French president Macron held a two-hour phone call with the Russian leader Vladimir Putin to approach the situation in a democratic manor. This could have seemingly halted a potential invasion as overnight the US president Joe Biden has announced they will hold a summit this week, however Biden has said that if any invasion takes place before the summit then talks will be off and severe consequences will be imposed on Russia. The UK government has said that any war would be catastrophic and there will be strong consequences for Russia, this will almost certainly have a knock-on effect to recovering economies not only in the UK but for Europe too as supply lines like gas may be cut off from Russia to mainland Europe.

Coronavirus update

Today Boris Johnson is expected to announce the next phase of the loosening of all Covid-19 restrictions in England. The prime minister will unveil the ‘Living with COVID’ plan. This will see those who test positive and their close contacts no longer having to self-isolate. This morning Boris Johnson said “today will mark a moment of pride after once of the most difficult periods in our country’s history as we begin to learn to live with Covid”. Boris also said that restrictions have only been able to be lifted due to the successful vaccine rollout in the UK. News of this has not affected Sterling as may be expected as news could have already been priced into the market and also the tensions in eastern Europe currently dictating the markets.

Data out this week

It’s a busy week on the data front starting this morning in both the EU and the UK as both post Markit PMI data. Tomorrow morning a member of the BoE David Ramsden makes a speech which may give a further indication of whether the Bank of England will raise interest rates in the UK although this would not be anything official. On Tuesday afternoon the US release PMI data along with consumer confidence and housing price index. Wednesday the release HICP which captures the changes in price of goods and services. On Thursday afternoon the US post GDP and initial jobless claims plus new homes sales. Lastly on Friday the UK release GFK Consumer confidence, the EU also release consumer confidence along with business climate and in the afternoon to finish of the week durable goods is also posted in the US.