GBP - British Pound
UK prime minister, Boris Johnson's political troubles dominated proceedings around the pound yesterday. Johnson did no favours for the pound with his “let the bodies pile high” comment and some are predicting this latest scandal will hinder the government's efforts to push the UK economy further despite the solid vaccination campaign so far. On the whole though the pound has been relatively insensitive to the political noise within the UK with it remaining supported against both the EUR and the US dollar this week.
The pound is taking most of its direction this week from other currencies, and the Federal Reserve's meeting today could result in GBPUSD making a renewed drive for the 1.40 psychological level.
The currency markets have started this week relatively subdued, with yesterday seeing the US dollar gaining some ground in trading ahead of today’s Federal Reserve meeting and rate decision. We have seen the dollar edge a little higher with EUR/USD trading below 1.21 and GBP/USD sitting just under 1.39.
The Conference Board's Consumer index came out yesterday printing very strong figures of 121.7 vs a forecasted level of 113 – its highest level since February 2020. Yesterday's figures trump that of last month which at the time was the highest level in a year. This positive data has predominantly been driven by the impressive vaccination progress, economic stimulus and a stronger economic outlook on the whole in the US.
Roughly 30% of the US adult population have now been fully vaccinated with an abundance of the vaccine across the US at the moment, with virtually anyone that wants to get vaccinated is able to do so now. All of this therefore points towards some economic normality in the US this summer.
The speed of the US vaccination programme has enabled many cities to rapidly ease restrictions, adding to a huge hiring spree and big rebound in consumer spending – so many will be wondering if the US Central Bank will move away from their ultra accommodative monetary policy when they meet today. The economic rebound has increased already mounting pressure on Jerome Powell, head of the Federal Reserve, to explain what else is to be achieved before they begin to rethink aspects of its monetary support for the US economy. It’s unlikely that there will be much talk of tapering purchases with unemployment rates in the US still up at 6%, but investors will be looking at any hint at all from Powell about when these types of conversations may begin.
1.3855 - 1.3930 ▲GBP/EUR:
1.1460 - 1.1550 ▲EUR/USD:
1.2040 - 1.2110 ▲GBP/AUD:
1.7810 - 1.8120 ▲