Market report: pound boosted by ‘Freedom Day’ confirmation


Sterling rallied against the euro and dollar on Monday as the Prime Minister confirmed the country was on track for ‘Freedom Day’ on July 19th. 

The confirmation lockdown will all but end next week was welcomed by investors but didn’t result in any significant spikes as the good news was mostly priced in when the news was first announced. Investors now expect higher levels of economic growth for the UK as all businesses forced to shut by the restrictions will finally be able to reopen their doors. 

Despite this, some investors and analysts remain concerned sterling could face a difficult few months. Over the last 18 months sterling has benefited from its status as a risk-on currency. This has seen it trade higher as the global outlook improved but sets it up to trade lower if market sentiment shifts to risk off as the global outlook worsens. 

With Covid-19 cases rising once again, the delta variant is now present in 104 different countries. If countries begin to reintroduce lockdown measures, risk off sentiment seems likely. This will fuel demand for safe-haven currencies like US dollars and Japanese Yen, which tend to hold up better in uncertain times, and cause a sell off of sterling.

Key announcements 

07:00 – EUR – Harmonized index of Consumer Prices (YoY) (Jun) met expectations of 2.1%
13:30 – USD – Consumer Price Index ex Food and Energy (MoM) (Jun) expected 0.4% from 0.7% previous 
13:30 – USD – Consumer Price Index ex Food and Energy (YoY) (Jun) expected 4% previous 3.8% expected 0.4% from 0.7% previous