Home Daily Commentaries Economic outlook due to improve…

Economic outlook due to improve…

Daily Currency Update

GBP - British PoundUK investors are currently fixated on the Bank of England meet on Thursday. The BoE are expected to vote to leave their interest rate unchanged, however their updated economic outlook will provide a great insight into how well the UK has bounced back since their February outlook. Bailey has already stated that his opinion on recovery has not changed, despite a huge UK roll out and that we should expect a rapid shift to pre-covid economic levels throughout 2021. They are also likely to associate the rising bond yields with the improving economic outlook. UK growth dropped by 9.9% in 2020, however has gained more than expected in 2021 so far with a 1% increase in Q1.

Key Movers

Much like the BoE, the Federal Reserve also hold their central bank meet this week. Powell is not concerned about inflation or rising yields and attributes it to a bettering economy. He will likely upgrade his economic output following a string of recent positive US data. The US Dollar has seen a small rally recently which certainly links to the better-than-expected data releases. Powell will likely change his tone on US interest rates too. After claiming that rates won’t be hiked until 2023, analysts expect him to change his outlook, however, may not discuss the notion at this meet. The Eurozone struggling to create an effective vaccine distribution has been widely documented, however it seems things have just got worse. Many of the bloc’s economic superpowers, namely France, Germany, Spain and Italy have suspended the use of the AstraZeneca vaccine, due to patients claiming they’ve suffered blood clots as a side effect. This is obviously extremely costly and slows down the COVID fight. Many claim a 3rd wave has begun in Germany already. Expect GBP/EUR to rally in the short to medium term as it tests the 1.17 handle once again.

Expected Ranges

  • GBP/USD: 1.3735 - 1.3930 ▼
  • GBP/EUR: 1.1520 - 1.1700 ▼
  • GBP/AUD: 1.7805 - 1.8040 ▼
  • GBP/CAD: 1.7165 - 1.7345 ▼