- Posted by currencies in Bank of England, Bremain, Brexit, coronavirus, Currency, Dollar, Economy, election, EUR, Fed, GBP, No Deal, Sterling, UK, Uncategorised
- February 25, 2021
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Yesterday we saw continued strength in GBP as it hit 1.42 against the USD, levels not seen since April 2018 and touching a 1 year high against the Euro at 1.17. The main driving force behind the surge in Sterling was Boris Johnson’s roadmap out of lockdown announced on Monday, coupled with the ongoing success of the vaccination roll-out in the UK. Over 18 million people have been vaccinated with at least 1 dose, providing optimism The UK can hit their Mid-April target of vaccinating the over 50’s. There were also reports Wednesday morning suggesting The UK could potentially lift all restrictions earlier than June 21st if vaccinations, cases and hospitalisation figures keep going in the positive direction as they are currently.
The focus for GBP will be the budget to be laid out by Rishi Sunak next week, which is expected to be a ‘giveaway’ budget with hopes of injecting The UK with a post-lockdown boom. Some of the proposed policies are rumoured to include an extension to business rates holiday, Stamp Duty exemption extended until June, and the furlough scheme also rumoured to be extended in certain industries.
USD has weakened further this morning, falling to almost 3-year lows against several currencies after Fed Reserve Chairman Powell stated the Central Banks monetary policy was here to stay. He continued to state that this directive will not differ until the economy is clearly improving, with specific focus on the jobs market and inflation. With a key emphasis on the jobs market, unemployment claims due out this afternoon are of huge importance. Figures are expected to show a slight improvement in this area, albeit still uncomfortably high. Also, later this afternoon, 4th Quarter GDP figures are due out with expectations of 2% growth. This is up slightly from initial expectations of 1.9% growth but still considerably lower than the 3.3% growth seen in the previous quarter.
Brussels is coming under constant pressure at present, with fears lockdowns across Europe will need to continue through March and possibly further forward due to a lack of vaccinations being administered, coupled with Covid infections across France, Germany and other nations still concerningly high. As it stands, The EU have vaccinated just 6% of its population, a poor figure when compared to The UK having vaccinated over 25% of its population. This comes after Germany alone recorded nearly 12,000 cases and 385 deaths yesterday, leading to Angela Merkel suggesting Germany could be entering a third wave of infections. It is rumoured that many people being offered vaccines are refusing them after comments from President Macron seemed to put the efficiency and effectiveness of the Astra Zeneca jab into question. All this uncertainty around vaccinations for The EU only continues to weigh down on the currency.