RationalFX : The pound remains well supported against the euro as investors remain focused on the reopening of the UK economy.
A third of adults in the UK have now had their first dose of the vaccine with figures showing new infections steadily on the decline with deaths down to just 104. The end to lockdown remains on track but the government also warns they must be vigilant about new strains of Covid.
UK Manufacturing data yesterday confirmed that the sector expanded faster than hoped despite COVID-19 restrictions. However, there was still disruption to supply chains put down to Brexit which limited the upside. The reading was 55.1 against a forecast of 54.9.
The dollar has gained in the past couple of days as U.S. government bond yields jump on expectations that growth and inflation will increase as the administration prepares new fiscal stimulus and vaccinations against COVID-19 become more widespread.
This saw the dollar index rise to a three-week high as investors bet on faster growth and inflation in the US. The Euro on the other hand is lagging behind with their growth forecasts well below expectations. The EU are currently behind with their vaccination program and also their stimulus packages. The USD was up against the euro by 0.17%.
Global equities rose and the S&P 500 was at its best reading since June the 5th. Optimism now stems from the newly approved Johnson & Johnson vaccine and the massive $1.9 trillion stimulus package that was agreed in the House of Representatives over the weekend. Assuming the stimulus package is approved by the Senate, the stimulus package will pay for vaccines, medical supplies and provide emergency financial aid to households and small businesses.
U.S. manufacturing PMI activity also increased to a three-year high in February amid a surge in new orders. Factories however still face high costs for raw materials amid labour shortages as a result of the COVID-19 pandemic.
The reports were the latest indication of strong economic performance early in the first quarter, thanks to nearly $900 billion in additional COVID-19 relief money from the government and a drop in new coronavirus infections and hospitalizations.
The factory activity rebounded to a reading of 60.8 last month from 58.7 in January which is its strongest reading since Feb 2018.
Source : ETFWorld.co.uk