14/05/2021

Market report: Indian variant could impact pound


GBP

Sterling retracted from recent high against the euro and dollar on Thursday as market sentiment shifted from risk-on to risk-off.

The adjustment follows a good spell for sterling, which has been the week’s strongest performing currency. Market relief over the Scottish election, further easing of lockdown restrictions and the Bank of England raising its growth forecasts had all made sterling an attractive bet.

Since then market sentiment has shifted with issues abroad causing investors to revert back to safe haven positions. In particular, rising tensions between Israel and Palestine. Whilst a stronger than expected inflation reading in the US has boosted demand for the dollar over risk sensitive currencies like sterling.

News of an Indian Covid variant spreading within the UK is also likely to have contributed. Health officials have upgraded the Indian Covid variants from “under investigation” to a “variant of concern”, following a reported 1,313 cases in the UK, up from 520 last week.

This has likely caused investors discomfort as if the variant isn’t contained the final easing of lockdown restrictions in June could be under threat. Especially after a Sage member admitted to reporters that step three of easing restrictions will continue on Monday, but a delay to easing restrictions fully on the 21st June may be “possible”.

Key announcements

13:30 – USD – Retail Sales (MOM) (Apr) Expected: 1% Previous: 9.7%

15:00 – USD – Michigan Consumer Sentiment Index (May) Expected: 90.4 Previous: 88.3


Why choose RationalFX?

Based in the heart of London’s financial district Canary Wharf, RationalFX has traded over $10billion in currencies across the globe. Take advantage of our competitive exchange rates, market expertise, suite of FX products and online payment platform when you make bank to bank transfers in over 50 currencies worldwide.

Whatever your reason for making overseas payments, we’re confident our currency specialists can save you time and money while providing peace of mind. Call our team now on: +44 20 7220 8181