25/01/2021

Sterling struggles to hold its gains


GBP

Sterling struggled to hold its gains at the end of last week due to some disappointing UK data released before the week closed. Market sentiment has improved after the week’s political events, investors looked to move away from the the safe haven US Dollar. As for the Pound though, its potential for further upward runs against both the Dollar and Euro seems limited as the domestic coronavirus situation remains highly concerning.

These worries intensified when the end of week retail sales figures came in even lower than what was forecast, further fuelling already major worries on the effect this third lockdown will have on the UKs economy. UK retail sales showed at 0.3% month-on-month, and the previous month’s figure was revised lower to –4.1%. The yearly retail sales figure only rose from 2.1% to 2.9% rather than reaching the expected 4.0%. On top of this gloomy news, UK PMI projections also fell short of expectations.

Some better news for the UK is numbers showing the UK is still leading Europe in its coronavirus vaccination effort and may have its population fully vaccinated some time before European countries do. This could give the economy a much needed headstart in its recovery from the latest round of restrictions and damage done to the economy.

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