Market report: pound drops as investors’ heads turn
Sterling suffered significant losses against EUR and USD last week as a shift in recovery sentiment caused investors to look elsewhere.
This comes as the UK’s vaccination rate advantage over the EU had diminished, causing increased confidence in the euro.
The UK’s daily run-rate is currently 437,000 vaccinations a day, but the growing need for second doses means the number of first doses is around 90-130,000. This is big drop from 500,000+ in March.
In contrast, the EU’s vaccination rate has accelerated notably as supplies increased. Germany vaccinated nearly 740,000 people last Wednesday, a daily record. While Belgium vaccinated more than 550,000 the previous week, also a new record. France is meanwhile consistently hitting more than 450,000 vaccinations per day.
Vaccination numbers will continue driving sentiment towards GBP. If the UK cannot begin to extend their previous advantage we could see further losses for the pound. Therefore, UK investors will be hopeful that positive data releases this week can give the currency a welcome boost.
Most notably, Britain’s February job market report. This is published tomorrow and a strong job market should keep investors optimistic about Britain’s potential pandemic recovery.
On Wednesday, we’ll then get the March inflation rate data. An impressive rise in inflation could indicate that UK price pressures are rising more than expected. This should prompt the Bank of England to take a more hawkish stance on monetary policy sooner than anticipated.
Towards the end of the week, UK retail sales data will be published, as will April’s Purchasing Manager’s Index projections (PMI). The PMIs will give investors a better idea of how Britain’s economy is performing as it gradually reopens this month.
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