The Pound was held yesterday morning as global trends and the Dollar dictated play. Sterling did gain some support from the optimism that the vaccine rollout would lead to a steady easing of lockdown restrictions and strong economic recovery. UK bond yields also moved higher after the market open. Later, Sterling was unsettled by a German study that highlighted increased risks of blood clotting from the AstraZeneca vaccine.
Sterling dipped close to 1.3700 against a stronger Dollar but hovered around 1.1710 to the Euro. This morning the Pound opens near 1.3720 against a stronger Dollar and 1.1720 to the Euro on expectations of a global economic recovery. There has been little reaction from UK GDP figures being revised upwardly.
The dollar maintained a strong overall tone during the day with a renewed retreat for commodity currencies. There were some reservations over US coronavirus developments following a strong warning from a senior member of the Center for Disease Control (CDC) over the current increase in cases.
The Case-Shiller house-price index recorded an annual increase in house prices of 11.1% for February from 10.2% previously and the highest reading since mid-2014.
Consumer confidence increased sharply to a 12-month high of 109.7 for March from 90.4 previously and well above consensus forecasts of 96.9. Consumers were also more optimistic over the labour-market outlook. Richmond Federal Reserve President Barkin stated that the economy would be driven strongly by excess savings.
The Eurozone industrial sentiment index strengthened to 2.0 for March from -3.1 previously and well above market expectations of -5.0. There was also a recovery in the services sector to -9.3 from -17.0. German consumer prices increased 0.5% for March, in line with consensus forecasts with the year-on-year rate increasing to 1.7% from 1.3% which was also in line with market expectations. With Eurozone CPI inflation data being released today, expectations that the data will show a year-on-year rate increase to 1.4% from 0.9%. There are strong expectations that the ECB will look through any short-term increase in inflation.
The Euro remained under pressure during the day amid a lack of confidence in the Eurozone outlook. There were further concerns over vaccine developments with another round of negative reports surrounding the AstraZeneca vaccine.
As of writing, the single currency currently trades around 1.1725 mark against its US counterpart.
Data to watch
07.00 GBP - Final GDP
09.00 EUR - Consumer Price Index
13.15 USD - ADP Non-Farm Employment Change
Posted in Daily Market News on Mar 31 2021