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UK awaits lifting of lockdown restrictions

GBP - British Pound

On recent history this week has been a pretty calm week for sterling with GBP/USD trading between 1.25 and 1.2320 for most of it, a very narrow range compared to some of the huge moves seen throughout April and especially March. It appears we are fully in the "new normal" as the world starts to come through the worst of the Coronavirus and countries begin to look for exit strategies to lockdown conditions. Many European countries have begun to relax restrictions imposed on its countries citizens and this Sunday the UK will learn the timeline of its exit from Prime Minister, Boris Johnson.

Anyone expecting life to go back to normal on Sunday should think again, its likely that anyone who can work from home will be advised to continue to do so and although some high street shops will likely be allowed to re-open, strict guidelines on social distancing will have to be enforced in an effort to avert another peak in Covid-19 cases. Its not 100% clear whether Monday will be the day more freedom of movement will be granted however with pressure growing on the PM to re-start the economy and cases of the infection on a consistent downward trend it seems likely it will be.

The Bank of England this morning announced its interest rate decision earlier than normal at 7 am with no change of policy. GBP/USD has rallied from a two-week low on what was determined to be a slightly more upbeat monetary policy summary than some were expecting. The bank advised it expects a 14% contraction in the economy this year before a 15% rebound in 2021. With Brexit talks at an impasse, UK government borrowing at an all time high, and an economy still under lockdown some would see next year's expected jump in GDP as optimistic to say the least, however sterling has rallied on the back of it with GBP/USD close to 1.24 and GBP/EUR above 1.1450. Bank of England Governor Andrew Bailey is due to hold his press conference at 10am and the meeting minutes are due at midday. The UK signs off for the weekend this evening with tomorrow being the early May bank holiday. Normally falling on the first Monday of the month this year it has been pushed back to tomorrow to coincide with the 75th anniversary of VE Day.

Key Movers

Angela Merkel announced a further lifting of restrictions yesterday advising that all shops can re-open as long as measures are taken to keep people apart. Those craving for some live sport will be overjoyed to hear that the Bundesliga will restart later this month with matches taking place behind closed doors. This move will be closely watched by England's Premier League as it tries to work out a system which will allow it to finish the season. The remaining matches being played at neutral venues behind closed doors is being discussed with Liverpool supporters praying a way through can be found as it stands on the brink of its first league title in 30 years.

Data-wise the rest of the week is again all about American employment numbers with another dire Unemployment Claims figure due at lunchtime with estimations another 3m will have signed on last week. Tomorrow we have the first jobs report that will fully reflect the impact Coronavirus has had on the world's largest economy. Some eye-watering numbers are predicted with the Non-Farm Employment change figure expected to show a fall of 21.4m, around 30 times worse than any drop seen during the 2008/2009 Financial Crisis. The level of unemployment is expected to sky rocket from 4.4% to 16%! Anything much worse/better than predicted will see a flight to safety/risk so it could be a volatile afternoon after a relatively sedate week. EUR/USD trades flat around 1.08 with USD/JPY up a touch to 106.35 reflecting a slightly risk on day in equity markets with all major indices posting gains.

Expected Ranges

GBP/USD: 1.23 - 1.2430 ▲

GBP/EUR: 1.1390 - 1.1515 ▲

GBP/AUD: 1.91 - 1.9260 ▼

GBP/NZD: 2.04 - 2.0565 ▼

GBP/CAD: 1.7380 - 1.7530 ▼