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Markets on jitters ahead of Super Thursday

GBP - British Pound

The jitters we are seeing in the market can be most clearly seen in Sterling based crosses. Both GBPUSD and GBPEUR are trading lower this morning and the pound is also down against all of the commodity currencies of interest (Australian dollar, Canadian Dollar and New Zealand Dollar).

Two items are driving this at the moment. Firstly, and as mentioned throughout the week, Covid cases in the UK are rising with yesterday seeing the highest number of infections since late February. This is causing more and more concern that the June 21st 'Freedom Day' will be pushed back. Matt Hancock is speaking in front of MPs this morning so all eyes will be focused on him.

The second factor driving Sterling weakness at the moment is Brexit. The escalation in tensions over trade rules in Northern Ireland has driven the pound lower and even President Biden has added pressure to end the stand-off.

Key Movers

If eyes in the morning will be fixed on Matt Hancock, the limelight after lunch will be on Christine Lagarde and the US inflation report. The ECB is widely expected to leave interest rates unchanged alongside the asset purchase programme currently in place. However, there is a growing thought amongst investors that Lagarde may hint that the current asset purchase programme could be tapered later in the year, something that could see the euro strengthen particularly in the face of the US dollar. The data at the moment is there to support this with Q1 GDP recently revised higher and PMI data hitting close to all time highs.

Almost simultaneously US inflation is set to be released showing a monthly reading of 0.4% showing an annual inflation of 4.8%. Because the Federal Reserve have been so adamant that inflation levels are only 'transitory' at the moment then even a big hit on the inflation figures may not be enough to move the dial amongst investors and stem US dollar loses.

Expected Ranges

GBP/USD: 1.4030 - 1.4160 ▼

GBP/EUR: 1.1550 - 1.1630 ▼

GBP/AUD: 1.8180 - 1.8290 ▼

EUR/USD: 1.2110 - 1.2230 ▲