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Sterling unable to reach 2021 Dollar highs

Sterling unable to reach 2021 Dollar highs

GBP

The Confederation of British Industry retail sales index fell quite a bit short of expectations in May with surveyed retailers concerned that initial bounce in trade following the easing of lockdown restrictions would fade quickly. The survey also showed a further decline in employment and price pressures increased. Overall the data triggered some reservations that there would be a sustained boost to consumer spending and the wider recovery.

Sterling popped up above the 1.4200 level against the Dollar, falling short of 2021 highs before fading on fresh concerns that a strong UK recovery had already been priced in and that supply-side issues could limit any recovery. 

This morning the Pound opened near 1.4150 and the Euro just above 1.1560. 

 

USD

The US Dollar continues to struggle and has hit new lows versus a basket of currencies – with the Pound pushing a 5 year high versus the Dollar. The easing of concerns around Covid and the lessening of geo-political tensions in the middle east have added strength to the risk on mood which has encouraged Dollar weakness amid a relatively light economic calendar.

San Francisco Fed President Daly stated that the Fed is talking about tapering but the rhetoric was not strong enough to provide significant US dollar relief with the currency remaining close to 4-month lows versus the Euro. The calendar from the US today is quiet but the preliminary GDP reading’s tomorrow from the US will be keenly watched to see how the economy is recovering from the pandemic.

 

EUR

The Euro is currently dropping slightly after touching daily highs of 1.2260. Currently trading around the 1.2245 against the Dollar as we begin Wednesday’s trading session. The currency pair jumped to fresh high since 8th January the previous day amid broad US Dollar weakness with the risk-on mood proving an additional bonus for the Euro. 

Additionally, the ECB has a comparatively lesser push towards monetary policy adjustments than the US central back, which in turn is directing risk-takers to the European currency.

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