GBP: Jobs growth helps allay lockdown fears
EUR: Biden in Europe
USD: Fed meeting tomorrow
Sterling
Our expectations that an extension to the current Covid-19 conditions would not be met with a sterling sell-off proved to be correct and the pound finds itself in almost exactly the same position as it was this time yesterday.
We expect sterling to be supported this morning courtesy of a strong jobs announcement this morning that saw the amount of unemployed people in the UK decline by 113,000 and pay rising by 5.6% compared to this time last year.
With strong inflation and retail sales numbers also expected this week, sterling should be able to count on some encouragement and move higher.
Euro
President Biden is in Europe today following the G7 meeting over the weekend. It has been confirmed in the past few minutes that the EU and US have resolved the trade dispute between Boeing and Airbus that rumbled on through the Trump presidency. This may offer a little support to the euro but it is hardly likely to materially change anybody’s outlook for the pair.
US dollar
Ahead of tomorrow’s Federal Reserve meeting we expect USD to remain quiet. There are a few data releases this afternoon to take note of, most importantly the retail sales release at 13.30 which will likely show Americans spending more on travel than goods as the vaccine program ramps up Stateside.
If risk appetite remains as strong as it is currently – European stock markets hitting multi-year or all-time highs – then we expect the dollar to remain gently offered throughout the week although the majority of this move is more likely to come after tomorrow evening’s Federal Reserve meeting.
Elsewhere
The tea leaves continue to look poor for the Japanese yen moving forward as we believe that both the yield story and the recovery narrative moves investors away from a reason to hold the currency. GBPJPY is a hair’s breadth away from the levels seen pre-referendum.
Market rates
Today’s interbank rates at 08.19 against sterling. Movement vs yesterday.
| Euro | €1.162 ↓ |
| US dollar | $1.411 ↓ |
| Australian dollar | $1.831 ↑ |
| South African rand | R19.36 ↑ |
| Japanese yen | ¥155.2 ↑ |
Have a great day.
