GBP: A lot in the sterling price

EUR: PMIs strong so far

USD: Taper talk and action remains a long way off

Sterling

Sterling is giving back some of the gains that it has made this week despite a strong retail sales report that showed just how much us Brits love to shop.

Despite a 9.2% increase in retail sales sterling has fallen which suggests that a lot of good news is priced into the pound currently and therefore for further gains, we’re going to have see something that we have yet to see; Bank of England rate setters talking about interest rate rises and a cessation of stimulus measures.

The path to that from here is not a straight line however, and the pound will have to navigate the end of furlough carefully in particular given the expected increase in unemployment that will likely come as government support ends.

For now, 1.42 looks like a line in the sand for GBPUSD

Euro

So far this morning, PMIs from the European economy are shaping up strongly and a move higher for the euro could easily follow. Vaccine news remains positive too which will allow for a solid base to the single currency that was lacking in the first quarter.

US dollar

The dollar remains in a sticky situation and, for us, unless there is a dramatic change in the language of the Federal Reserve in the coming months towards something that highlights an increased need for stimulus withdrawal, dollar declines are more likely than not.

Elsewhere

Away from the three currencies above it is the Canadian dollar that is drawing a lot of focus at the moment, with a central bank that is courting the chances of higher rates and stronger data suggesting that those rate rises may be needed soon.

GBPCAD looks like it wants to test levels around the 1.72 mark with USDCAD inching towards 1.20.

Market rates

Today’s interbank rates at 09:16 against sterling. Movement vs yesterday.

Euro	€1.161 ↑
US dollar	$1.418 ↑
Australian dollar	$1.832 ↓
South African rand	R19.84 ↑
Japanese yen	¥154.1 ↓

Have a great day and a better weekend.