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Pound hits two-month high on reopening optimism

currency-newsPound hits two-month high on reopening optimism
The pound rallied on Monday as the reopening of another large part of the UK economy helped bolster economic optimism.
 
Sterling is off to a mixed start so far this morning, with GBP/EUR flat at €1.1637 and GBP/USD rising to $1.4202. GBP/CAD is rangebound at C$1.7062, while GBP/AUD and GBP/NZD have weakened to AU$1.8200 and NZ$1.9583, respectively.
 
Looking ahead, will a robust jobs report help to propel GBP exchange rates higher again today?
 

What’s been happening?

The pound trended higher at the start of this week’s session, hitting a two-month high against the US dollar as the latest stage of lockdown easing saw more of the UK economy reopen.
 
Indoor hospitality venues such as restaurants, and cinemas reopened for the first time in almost five months, bolstering hopes for a strong economic rebound in the second quarter.
 
However, these gains were tempered somewhat by rising concern over the spread of the Indian variant of coronavirus in the UK, amid fears it could threaten the government roadmap for restrictions easing.
 
The US dollar, meanwhile, was placed on the defensive on Monday, in spite of a pick-up in US Treasury yields.
 
This came after comments from Federal Reserve Vice Chairman Richard Clarida, in which he suggested the bank is ‘attuned and attentive’ to rises in inflation but didn’t indicate whether the latest surge will force the Fed to act.
 
Finally, the euro was mostly rangebound yesterday as limited data and ongoing coronavirus concerns left the single currency without any clear direction.
 

What’s coming up?

Kicking off today’s session was the UK’s latest jobs report.
 
According to data published by the Office for National Statistics (ONS), unemployment in the UK unexpectedly fell to 4.8% in March, as the extension of the government’s furlough scheme helped to save jobs.
 
The accompanying wage growth figures were below expectations, but this doesn’t seem to have put a dampener on the pound this morning.
 
The release of the Eurozone’s latest GDP estimate could leave the euro struggling to attract support this morning as it is set to confirm the bloc slipped into a double-dip recession in the first quarter of 2021.
 
Meanwhile, in the absence of any notable US economic data, the US dollar will likely be driven by market sentiment, with USD exchange rates set to weaken if the mood continues to improve.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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