- Posted by currencies in Bank of England, Budget, coronavirus, Dollar, Economy, EUR, Fed, GBP, Prime Minister, Sterling, UK, Uncategorised
- April 15, 2021
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The UK economy saw a return to growth in February despite still being in lockdown with businesses preparing to open up again, as well as exports to The EU showing a recovery since The UK’s split from the bloc. GDP rose by 0.4% in February showing some signs of improvement after an initial drop of 2.2% in January. The main improvements came with Retail Sales picking up whilst a pick up in car production led to a rise in manufacturing activity. These latest figures have brought optimism that the easing of lockdown measures over the coming months coupled with The UK’s impressive vaccine program would help see a stronger demand from consumers in services and products.
A cause for concern for GBP is the fact that the chief economist Andy Haldane announced on Tuesday that he is due to step down from his role at The Bank of England. This led to a drop off in GBP against both EUR & USD due to his stance on interest rates and having consistently voted against negative interest rates. Moving forward this brings into question whether The UK will see negative rates sooner rather than later.
All focus for The U.S. will be on Retail Sales for March, expected out this afternoon. With states across the country opening back up, and the latest stimulus package providing residents with a $1,400 cheque the forecast for Retail Sales is expected to bring a huge boost to the sector. The importance of this data will give an outline to how the economy can recover, with Retail Sales having a direct impact on Inflation in coming months. The Fed Reserve have constantly down played raising interest rates but if inflation increases off the back of increased consumer spending it may lead to an interest rate hike in the future. (109)Employment data will also be crucial to look at this afternoon with signs showing of a slight recovery from the beginning of the month which will only further consumer confidence.
Europe’s economy is projected to return to pre-crisis levels in 2022 according to the International Monetary Fund, however this is dependent on the bloc’s Covid-19 vaccination campaign. A number of countries within the bloc have been forced to introduce new restrictions over the last few weeks due to a surge in Covid infections, leading to a drop in the bloc’s growth forecast. The uncertainty around how the economy will recover is largely due to potential new variants along with the speed of the vaccination roll-out. There has been further bad news recently for the bloc with Johnson & Johnson delaying the roll-out of the vaccine in Europe after authorities in The U.S. raised concerns about rare blood clot complications.