Market report: pound rallies against dollar & euro


Sterling was the best performing currency on Monday, rallying close to 1% against the euro and just over 1% against the dollar.
Investors have struggled to pin the pound’s recent decline on one single factor and a clear reason for sterling’s appreciation yesterday is equally illusive. Instead, it seems a combination of factors are at play.

Seasonality is one option. Historically, April is a relatively strong month for sterling as FTSE 100 companies make their dividend payments. Optimism for a post-pandemic bounce has also increased following the re-opening of the UK economy earlier this month. According to market researcher Springboard, the number of people visiting retailers was 88% higher than the previous week.
Additionally, market sentiment has seemingly shifted from risk off to risk on since the back-end of last week. This is having a particularly significant impact on GBP/USD where the lessened demand for safe-haven currencies has helped the rate post its best level since February.

According to data yesterday, the UK appears to be coping with pandemic well, showing only four deaths, – the lowest since September 2020. Elsewhere, the European Union and the United States vaccination programmes have come a long way and there is an assumption that the worst of the pandemic is now behind us. A real post-pandemic global recovery finally seems underway.

Key announcements

07:00 – GBP – Claimant Count Change (Mar)
actual: 10.1k consensus: 24.5k
07:00 – GBP – Unemployment rate (3M) (Feb)
actual: 4.9% consensus: 5.1%
09:00 – EUR – ECB Bank Lending Survey