Sterling remains on the front foot
Another positive day for sterling saw the pound maintain gains made earlier in the week. British Retail Consortium’s (BRC) Retail Sales data for February was released yesterday, beating forecasts by 1.57%. This was positive for sterling as it meant a return to growth after a disappointing reading the month previous. This paired with the ongoing vaccination rollout gives investors’ confidence sterling can post further gains as restrictions are eased in the coming weeks. Further to this, covid related deaths have also continued to significantly drop off paired with a reduction in new daily cases.
The key driver of GBP’s sharp appreciation over the past couple of months has been the UK’s vaccination rollout when compared to places such as the EU and America. However, latest government data has shown the UK’s rate of vaccination has stalled at a constant level. While it has not dropped off. it has not increased its capacity to vaccinate more people daily, thus allowing other nations to start catching up. For example, as of the 8th of march, the EU administered over a million doses, almost double what they were achieving at the start of February. While this is still a small amount ,considering the size of the bloc, it is a move in the right direction for the region. The US has also increased their pace, with over 92 million doses being administered overall and Biden committing to every US adult having a vaccine by end of May.
While this is positive news for the global economic recovery, it could mean gains sterling has experienced over the past few weeks could reverse as investors begin to look at the bigger picture. Other countries are now set for a quicker economic recovery, thus potentially diminishing the attractiveness of sterling.
12:30 – USD Consumer Price Index ex Food & Energy (MoM)(Feb) [expected 0.2%]
12:30 – USD Consumer Price Index ex Food & Energy (YoY)(Feb) [expected to remain the same]
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