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Pound surges 1% against euro and US dollar

currency-newsPound surges 1% against euro and US dollar
The pound got off to a stellar start on Monday, as GBP investors expressed their relief that Scottish National Party (SNP) had failed to secure a majority in last week’s election.
 
Sterling appears to be taking a breather so far this morning however, with GBP/EUR flat at €1.1636 and GBP/USD muted at 1.4118. GBP/CAD is rangebound at C$1.7095, while GBP/AUD and GBP/NZD are holding steady at AU$1.8037 and NZ$1.9451, respectively.
 
Looking ahead, the euro and Germany’s latest economic sentiment index will be in focus this morning.
 

What’s been happening?

The pound roared higher at the start of this week’s session, gaining over 1% against the euro and US dollar as fading political risk triggered a significant relief rally.
 
This came on the back of the news that the SNP had failed to secure a majority in last week’s election, removing the immediate risk of another independence referendum.
 
Further bolstering these gains was confirmation that the UK will move to the next phase of easing coronavirus restrictions, with Boris Johnson announcing more of the economy will reopen from 17 May.
 
The euro, meanwhile, was subdued yesterday after conflicting comments from European Central Bank (ECB) members regarding the bank’s future policy.
 
EUR investors were left confused as one policymaker hinted at a potential tapering of its bond buying programme next month, while another suggested the bank may follow the Federal Reserve in allowing inflation to run hot for a period.
 
The US dollar also struggled on Monday as the currency continued to be weighed down by last week’s dire payroll release.
 

What’s coming up?

Looking ahead, the latest ZEW surveys from Germany will be a key focus for investors today.
 
Consensus estimates predict that economic sentiment in Germany will have improved this month but another miss could send the euro lower this morning.
 
For GBP investors, the spotlight will be on a speech by Bank of England (BoE) Governor Andrew Bailey later this afternoon. Traders will be looking for any comments regarding monetary policy, particularly those pertaining to the bank’s modest tapering of its weekly bond purchases.
 
Finally, the latest JOLTs job opening figures will act as the main catalyst of movement in the US dollar today, with USD exchange rates potentially strengthening if vacancies continued to rise in March.
 
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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