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RationalFX: GDP rise lifts sterling

RationalFX: The UK economy showed further signs of life yesterday as GDP rose by 16.9% and 1.3% in Q3 and Q4 respectively.

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GBP

GDP had fallen by 9.8% in 2020, the biggest drop for over 300 years, so this was welcome news. This growth is likely partly funded by the high level of accumulated household savings. The saving rate increased from 14.3% to 16.1% in Q4 of 2020.This robust recovery gives hope for further growth during 2021, especially with the oncoming opening of the economy.

However, Britain’s current account deficit widened to £26bn in Q4 of 2020, almost double the shortfall seen in the previous three months.This is largely due to the rush to stockpile EU import goods before Brexit and is set to continue with EU export numbers at record lows.

EUR

After a tough few months, the euro might just see a reversal of fortunes in April. Pfizer vaccine supplies are expected to double over the coming weeks. This could see the EU inoculating around 0.6% of the population per day, putting them closer in line with the UK and USA’s current rate of 0.8%.

The sudden increase in cases across Europe, supposedly fueled by the ‘British’ variant, makes the announcement especially timely. Even more so considering the AstraZeneca vaccine’s reputation among EU citizens following a tiny number of blood clot cases

French President Macron announced new lockdown measures yesterday, with all non-essential shops  closing and schools going remote for at least three weeks.

Key announcements

15:00- USD- ISM Manufacturing PMI (Mar);

Expected to increase to 61.3 from the previous 60.8

Source : ETFWorld.co.uk

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