The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
Sterling opened last week’s session on the defensive, retreating in response to renewed Brexit tensions between the UK and EU as Boris Johnson and European Commission President Ursula von der Leyen clashed over the Northern Ireland protocol.
Adding pressure to GBP exchange rates through the first half of the week were concerns over the continued spread of the Delta variant of the coronavirus and the potential for it to threaten the UK’s reopening.
However, the pound mounted a convincing recovery on the back of comments from BoE policymaker Gertjan Vlieghe.
GBP investors seized on Vlieghe’s suggestion that the BoE could begin to raise interest rates in early 2022 so long as the end of the government’s furlough scheme doesn’t trigger a sharp rise in unemployment.
So far this week, we have seen the pound continue to face some headwinds due to concerns that the government may need to delay the next stage of lockdown easing, with additional pressure coming from a downwardly revised manufacturing PMI.
Looking ahead, May’s services PMI has the potential to lift Sterling as the finalised figures will also cover the period after indoor hospitality was allowed to reopen on 17 May and therefore could be revised higher.
However, the upside may remain limited, as long as UK coronavirus statistics continue to point to a rise in domestic cases.
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)