The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
This came following the news that the Scottish National Party (SNP) failed to secure an outright majority in the previous week’s elections.
Reinforcing the pound’s roaring start to last week’s session was Boris Johnson’s confirmation that indoor hospitality venues in England would be allowed to reopen from 17 May.
Sterling then received another lift in mid-week trade, and the GBP/EUR exchange rate even struck a two-month high, after the UK’s latest GDP figures beat expectations with a smaller-than-expected contraction of growth in the first quarter.
However, the second half of the week then saw the pound face some headwinds after Johnson warned that the new Indian variant of the coronavirus is of ‘concern’ to the government, while also refusing to rule out using new regional lockdown measures in the future.
So far this week, we have seen the pound continue to press higher, with the reopening of more of the UK economy on Monday and an upbeat jobs report reflecting well on the currency.
Looking ahead, the UK’s consumer price index on Wednesday may help extend these gains, as economists forecast a sharp acceleration of inflation last month.
The UK’s latest PMI figures could also provide a boost for the pound if economic activity continued to improve this month.
On the other hand, any upside in GBP exchange rates could be tempered by concerns that the spread of the Indian variant could threaten the UK government’s roadmap for reopening the economy.
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)