RationalFX : Last week the pound continued to be the best performing currency of its G10 counterparts and has remained at multi month high against the USD and Euro.
This was positive news given the backdrop of not so perfect economic data. The pound continues to be supported by the so far successful vaccine rollout which continues to hit the Government’s targets and yesterday hit the milestone of 15m people having their first Jab.
Although positive ministers over the weekend suggested that some industries and the wider economy may still be closed for some time yet as they use caution. However, the Government are coming under increased pressure from their own Tory backbenchers to open up the economy given the vaccine roll-out is so far going to plan.
The pound has remained around an 8-9 month high against the Euro with the 1.15 the near-term target and whilst the EU are way behind in their own vaccine campaign, we could see pound appreciate further.
Against the USD the market rate of 1.40 will be in sight as the Fed continues hint that more stimulus will be needed in the future whilst the Bank of England have downplayed the need for further interest rate cuts despite the gloomy economic picture.
“US President Biden spoke to US senators yesterday after a two-hour call with Chinese President Xi on Wednesday and warned that “If we don’t get moving, they are going to eat our lunch,”. This indicates that Biden will have a stronger focus on investing in the US to keep it ahead of China rather than the Trump administration that used export bans on technology.
The pound should continue to trade at these positive levels for this week as there is little data to shift it with the main data release being Fridays UK retail sales.
US Bank holiday
Source : ETFWorld.co.uk