The pound to dollar rate has been in high spirits this week, since embarking on an upward march on Monday afternoon. Since then, it has made significant progress, with fading expectations of negative interest rates, the UK’s strong vaccine rollout – roughly 18% of the adult population has already received at least one jab – and dollar weakness paving the way into unfamiliar territory. By yesterday morning, the pair touched a new post-2018 high as it broke through the 1.38 barrier for the first time in 33 months – where it remained this morning.
BoE Governor Andrew Bailey backed the UK government’s hardline stance for next round of Brexit talks. That’s right, more negotiations are required around regulation in the finance sector, and Mr Bailey called EU demands for City banks to comply with Brussels rules unacceptable. Speaking online to finance industry executives, Mr Bailey said “The EU has argued it must better understand how the UK intends to amend or alter the rules going forwards. This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself.”
The pound had enough momentum to brush off the National Institute of Economic and Social Research’s Gross Domestic Product estimate, after it slashed its growth forecast for 2021 to 3.4 per cent – from a previous estimate of 5.9 per cent, after considering the UK’s third lockdown and winter Covid surge.
US Consumer Prices Rise in January
US consumer prices rose steadily last month at the fastest pace in five months – largely because of higher gasoline prices – but underlying inflation remained soft as the Covid-19 pandemic continues to weigh on the jobs market and dominant services sector. The Labor Department’s consumer price index (CPI) increased 0.3 per cent in January after rising by a revised 0.2 per cent in December. In the 12 months through January, the CPI climbed 1.4 per cent after gaining a revised 1.3 per cent in December – forecasts had predicted that the CPI would rise 0.3 per cent and increase 1.5 per cent year-on-year.
During a speech on “The State of the US Labour Market” yesterday, Federal Reserve Chairman Jerome Powell painted a bleak picture of the US employment landscape. Mr Powell believes continued aggressive monetary policy support is required to overcome the many issues still facing workers. Despite the economy managing to reclaim more than 12 million jobs since the early days of the initial lockdown, Powell said the country is still “a long way” off where it needs to be in terms of employment.
All the action from the economic calendar comes from the US today, where the latest Jobless Claims figures are slated for release. Get in touch to discuss the impact of the latest figures on your upcoming currency exchange using the form below.
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