GBP: Green shoots are coming
EUR: Hindered by global tensions
USD: A quieter week
Sterling
With UK shops and restaurants open for a week, real time data is clearly showing that UK citizens have loved nothing more than hitting the shops, or a beer garden for a taste of normality. Similarly, road traffic, the number of people travelling to workplaces and job posting suggests that the combination of stronger spending and the vaccine effort should support sterling in the coming weeks.
It is how long this bounce lasts that is crucial for sterling but, in the meantime, this little impulse of pound strength is coming just as we get some negativity from both the US and Eurozone.
Euro
The euro enters this week off the back of two strong weekly performances although the single currency has a slightly softer tone this morning. Tensions between the US and China and the US and Russia has elevated the need for a haven currency, a characteristic that the euro is not fulfilling currently.
Improving vaccine numbers and rising European stocks should keep the euro supported as a base case for now with the ECB meeting this Thursday unlikely to add too much interest.
US dollar
With last week’s inflation and retail sales data, and treasury auctions out of the way, this week should be a quieter one for the US dollar allowing volatility to come lower across the board. With lower volatility can come a lift into emerging market assets, a play that is largely dollar negative and suffered during the strong moves in US debt markets through February and March.
Should the main global headlines remain ones of recovery then the USD may be in for a tough week.
Elsewhere
With haven currencies back in favour as geopolitical tensions rise, the yen and Swiss franc are stronger this morning. US China tensions over trade and US Russia tensions over – well how long have you got? – are nowhere close to peaking yet and may prevent risk from getting too far ahead of itself.
Market rates
Today’s interbank rates at 08:23 against sterling. Movement vs yesterday.
| Euro | €1.155 ↑ |
| US dollar | $1.384 ↑ |
| Australian dollar | $1.787 ↑ |
| South African rand | R19.71 ↑ |
| Japanese yen | ¥150.2 ↑ |
Have a great day everyone.
