Daily Currency Update

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The pound remains buoyant against the USD

GBP - British Pound

The pound remains buoyant against the US dollar in particular. Against the euro things are a little more difficult but the pound is still around 1% up for the month.

At the moment investors are seeing the pound with a glass half view and as long as the vaccination programme continues its rollout, and the roadmap doesn't alter too much, then the pound could remain well supported. The week for Sterling is wrapped up tomorrow by the latest health check of the UK economy with retail sales and PMI data all set to be released.

Key Movers

The main news overnight came from the Federal Reserve minutes. The key passage that investors have picked up on acknowledged that a number of the Fed members have suggested that it 'might be appropriate to begin discussing the plan for adjusting the pace of asset purchases'. Crucially there was no mention or use of the word tapering here but reading between the lines it seems that it is on the mind of a number of Fed members. The Fed's own dot plot indicates that rates won't rise until 2024 at the earliest but the market is pricing a rate hike in the first half of 2023.

The Jackson Hole symposium in August is being earmarked as a possible date for the Fed to change its rhetoric and begin tapering or talks of rate hikes. This is important because there is an old adage amongst global central banks that the Federal Reserve always makes the first move on shifts in policy (apart from Iceland who became the first central bank to hike rates in the Western world when it did so yesterday).

The minutes last night saw the USD eek back some of the loses it has endured the last couple of days. EURUSD dropped back to below 1.22 whilst GBPUSD came off the recent highs that we have seen.

Expected Ranges

GBP/USD: 1.4020 - 1.4200 ▼

GBP/EUR: 1.1500 - 1.1650 ▼

GBP/AUD: 1.8110 - 1.8240 ▼

EUR/USD: 1.2160 - 1.2220 ▼