- Posted by currencies in Bank of England, Brexit, coronavirus, Dollar, Economy, EUR, Fed, GBP, Prime Minister, Sterling, UK, Uncategorised
- May 17, 2021
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Over the last week we have seen Sterling exchange rates continue to rise against the Euro & Dollar as the UK plans to move to the next stage of reopening on 17th May- which will see many more businesses able to reopen which we am sure is music to all of our ears!
It also seems that the vaccine rollout in the UK, Europe and the U.S is getting stronger by the day, with no supply issues and vaccines are being deployed at a very fast rate- looking at the numbers this is having a very strong effect on the virus and seems to be helping.
One thing we are keeping an eye on is the rise of the new variants in the UK, it seems the Government is not ruling out having to take a step backwards with reopening in a few weeks, hopefully it does not come to this, it seems they have a plan for rapid testing and more vaccines to be deployed in the areas where cases have been rising, which hopefully will counteract the issue and mean the UK can comfortably move to the next phase, which would mean travel could continue to go ahead and the world can begin to return to a sense of normality.
In regards to how Sterling will look moving forward, much depends on how the pandemic looks through the rest of the year, if the vaccines are enough to prevent further lockdowns we will see the UK’s GDP rise and economic activity return to pre-pandemic levels, however there still seems to be some nervousness about winter- so that will be a wait and see game.
As the UK continues it’s path to reopening we may see GBP lose steam as the strength of the UK vaccine programme is priced in, and we may begin to see the Brexit effect weigh down on GBP. The flipside depends on how the ECB and Fed act throughout the year in respect to tapering of QE and interest rates.
This week the UK has a few important releases such as Employment, inflation and PMI’s- all of which will be market movers as economic data is now on the watchlist for traders- but more importantly, the Covid cases in the UK will have to be watched over the next few weeks so we can determine what Government may decide to do next.