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The pound has hit fresh highs against both the euro and the dollar this morning, as the UK’s speedy vaccine rollout and a fall in daily infections has boosted hopes of economic recovery. Sterling is trading near 2018 highs against the dollar and at 11-month highs against the euro.
Bank of England governor, Andrew Bailey, will testify before parliament’s Treasury Committee today and it will be interesting to hear any comments on the outlook for the UK economy.
In the US, Federal Reserve Chair Jerome Powell will continue his testimony before Congress today after a ‘dovish’ speech yesterday.
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GBP: Falling infection rates and vaccine rollout boosts sterling
The pound has hit fresh highs against the euro and the dollar this morning due to continuing success with the UK’s vaccine rollout and a drop in infections. As of yesterday, the UK recorded its lowest daily infections of the year and one in three adults have now been vaccinated.
Due to the quick vaccine rollout and fall in infections, there is hope for a swift economic recovery in the UK. Bank of England governor, Andrew Bailey, is expected to comment on this further in a testimony before parliament’s Treasury Committee later today.
The CBI distributive trades survey, which measures the health of the retail sector, revealed yesterday that only grocers saw any growth in volumes in the year to February, with non-store sales flat and other retail sectors reporting sharp declines. Meanwhile, internet sales growth hit a new record.
GBP/USD chart
EUR: Inflation rate figures released for the Eurozone
Europe’s slow vaccine rollout continues to weigh the euro down against sterling. The euro strengthened against the dollar yesterday and is still fairly strong this morning.
Inflation rate figures for the Eurozone were released yesterday, coming in at 0.9% year-on-year in January. This was the highest since February last year, boosted mainly by a jump in cost for services and non-energy industrial goods. Inflation increased 0.2% month-on-month in January.
Today is a light day for Eurozone data, but tomorrow we will see economic, industrial and services sentiment figures.
USD: All eyes on Powell testimony
The dollar is weaker this morning following Federal Reserve Chair Jerome Powell’s testimony in front of Congress yesterday.
Powell said that the economy is still a “long way” from full health. He added that the Fed would maintain their loose monetary policy stance until “substantial further progress has been made”. However, he seemed unfazed by the recent rise in inflation expectations. Powell will continue his testimony today.
As well as Powell’s testimony today, the markets will continue to look out for progress on Biden’s stimulus bill, which could be passed along party lines on Friday or Saturday.
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