Daily Currency Update

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Sterling Tests 3 Year Highs Against the Dollar

GBP - British Pound

GBPUSD dipped briefly below the $1.39 handle yesterday afternoon as US markets opened at 2.30pm GMT. However, Sterling made a steady recovery and was trading back above the $1.39 handle by the end of the day. The pair actually tested highs last seen in April 2018.
Two former Conservative finance ministers, Norman Lamont and Ken Clark, have mounted pressure on the Chancellor of Exchequer Rishi Sunak. They stated that Sunak needs to break the Conservative manifesto and raise the main rate of tax. This is all in the lead up to March 3rd when Sunak will deliver his treasury budget, it has been suggested he might have to raise taxes by £60bn in order to balance the books.

This morning we had UK inflation data year on year which printed a figure of 0.7% over an expected figure of 0.6%.

Key Movers

EURUSD has struggled to take a direction at the start of this week. It appears to be a case of two struggling currencies meeting each other head on. The Dollar has struggled since the second quarter of 2020, as the Federal Reserve cut the US interest rates to record lows after Covid-19 derailed the economy. The euro’s performance has been dampened recently due their lack of progress on a vaccination plan and numerous supply chain issues.

Eurozone data was slightly better than expected yesterday, with German and Eurozone ZEW Survey’s both pushing higher.

This afternoon sees the release of US retail sales data at 1.30pm followed by FOMC minutes at 7pm.

Expected Ranges

GBP/USD: 1.3850 - 1.3950 ▲

GBP/EUR: 1.1425 - 1.1515 ▲

GBP/AUD: 1.7870 - 1.7980 ▲

EUR/USD: 1.2010 - 1.2120 ▼