Sterling recovers as UK businesses reopen

Having dropped 3 cents against the Euro since 5th April, the Pound found buyers around the €1.15 mark and has flattened out. I don’t think you could call it a recovery yet; more of a breather perhaps. You’ll remember, we were at €1.08 in December 2020, and we saw this pair shoot up to €1.18 on 5th April, so a 30% retracement is not too much of a surprise. Anything lower may signal a change of direction for that trend. 

The Pound should be buoyed by a Deloitte survey showing record levels of optimism amongst British businesses regarding their profits in the year ahead. Also, large parts of the economy can start to reopen as from today, so that’ll be seen as positive, and the Pound has already risen half a cent in early trade. This morning’s EU retail sales data may stall that as it is expected to show a healthy improvement.

That half a cent gain is mirrored in the GBPUSD rate. That is up from $1.3670 to $1.3730 this morning as the UK economy re-emerges from lockdown and traders take profit on last week’s Sterling losses. We lack data for the UK economy today, but we will have a speech from Silvana Tenreyro, a member of the Bank of England Monetary Policy Committee. She has been known to drop hints about future policy, so is keenly watched.

BOC business outlook survey awaited

The lack of data is also a feature of the afternoon, except for the US Federal Budget Balance, but that is rarely market moving stuff. We will get the Bank of Canada’s business outlook survey, so be ready for some Canadian dollar volatility. The GBPCAD rate has matched the GBPEUR and GBPUSD in bouncing this morning. This pair is a full cent higher at C$1.7250, pretty much where it was this time on Friday.

British Business Optimism at record high

We see sterling recover across the board. It is up to AUD 1.80410 and NZD 1.9540. At that latter rate, be ready for some overnight volatility, as we will see retail and business confidence data from New Zealand overnight.

The big movers and shakers in the week ahead include UK and Chinese economic growth data, the New Zealand interest rate decision, UK manufacturing production data and a smattering of US numbers on retail and housing stats. Throw in a few central bank speeches, and we are set for a lively week.

And the death of HR the Duke of Edinburgh has quite rightly dominated the news over the last three days. He will have left a void in the royal family’s lives, and our hearts go out to them. It is such a shame that only after his death are we hearing much more about his challenging childhood, his phenomenal rise within the Royal Navy and the amazing work he did during his life. A very sad loss indeed.

Huge congratulations to Rachael Blackmore for becoming the first female jockey to win the Grand National. What an achievement. And finally, good luck to all the businesses allowed to reopen in the UK today. We’ve missed you.

 

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