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Sunak pledges support ahead of Budget

Monday 1 March, 2021

Daily Currency Update

Speaking on the BBC's Andrew Marr Show yesterday Sunak was keen to reassure the public that the government will keep spending as the UK economy begins to reopen over Spring and Summer. GBP/EUR currently trades around 1.1570.

Key Movers

As mentioned, the sharp sell-off in bonds around the world on Thursday and Friday saw some huge volatility as markets digested a potential rapid pickup in inflation in America. Joe Biden’s stimulus package is going through the motions of being approved by Congress and should be signed off in the next week or two despite protestations from some Republicans that it is too big. The extra cash injection to the economy is likely to see increased spending especially as millions of US citizens are due to receive cheques up to the value of $1400 in the mail should the bill pass as expected. This extra cash combined with an accelerating vaccine roll out is leading markets to predict a shorter time line before the Federal Reserve starts to taper some of its asset purchases. The Fed has remained tight lipped on the subject so far likely not wanting to send any messages that could hit business confidence. However, Fed Chairman Jerome Powell is set to speak on Thursday on the state of the US economy so we may gain some further insight on this thinking then. Former US President Donald Trump gave his first public address since being removed from office in a speech at the Conservative Political Action Conference. He put to bed the idea that he may start his own political party at the event instead pledging continued allegiance to the Republican Party and hinting he may run again in 2024, although its likely he will see how the mid-term elections play out before he decides one way or another. Data-wise this week’s main event will be Friday’s monthly US Jobs Report with a modest increase in employment being eyed for January. Unemployment is predicted to tick up to 6.4% from 6.3%. There is little news from the Eurozone so ongoing developments re: bond valuations and coronavirus will be the main driver for the single currency. EUR/USD is under renewed pressure currently down to 1.2040.

Expected Ranges

  • GBP/USD: 1.3880 - 1.40 ▲
  • GBP/EUR: 1.1525 - 1.1610 ▲
  • GBP/AUD: 1.7940 - 1.8090 ▲
  • GBP/NZD: 1.9135 - 1.9285 ▲
  • GBP/CAD: 1.7650 - 1.7780 ▲