Sterling remains range bound
Wednesday 31 March, 2021
Daily Currency UpdateSterling has continued its yo-yo pattern against both the EUR and USD. GBPUSD traded between 1.3709 and 1.3781 in the past 24 hours with GBPEUR ranged between 1.1693 and 1.1729. This comes as no surprise with little economic data to anticipate, sterling seems to be waiting for the next big headline to break these recent ranges. Data that is worth noting came from the US on Tuesday. CB consumer confidence soared to 109.70 in March, the highest level since the beginning of the pandemic. The release has only further supported a strong US dollar and the reason GBPUSD touched a session low 1.3709 mid-afternoon yesterday.
This morning we have seen some sterling gains after data showed UK GDP increased by 1.3% between October and December last year from the previous three-months. This beat the earlier estimate of 1% growth. Sterling touched over 1.3750 against the USD and 1.1720 versus the EUR on the news. US headlines will likely guide the currency market today as we await this week’s key event, Jo Biden’s infrastructure plan. The US ‘build back better’ fiscal move is expected to be announced at $3t with some media reports suggesting the stimulus plan could be as large as $4t. This is due to be announced around 5/6pm.
Key MoversThe US dollar has been in demand as fiscal stimulus and an aggressive vaccine rollout have prompted a strong US economic recovery. Since GBPUSD touched 1.4237 and EURUSD reached 1.2350 earlier this year, the USD has strengthened to 1.3683 and 1.1714 respectively. Data has also supported a stronger US dollar with consumer confidence soaring overnight to 109.7 and ahead of Biden’s announcement tonight, we are expecting non-farm employment change to see a forecast improvement on the previous 117k with 552k expected.
Alongside this we have also seen number of safe haven events with the 3rd wave of the coronavirus hitting major locations, US hedge fund going bust and we are still awaiting the global banking fallout from this event. It is worth monitoring the US dollar when global markets are a lot calmer to see whether this US strength remains.
- GBP/USD: 1.3650 - 1.3830 ▼
- GBP/EUR: 1.1680 - 1.1760 ▼
- EUR/USD: 1.1680 - 1.1790 ▼
- GBP/AUD: 1.8010 - 1.8150 ▲