Market Update 17th May – 23rd May

Where you will be able to keep up to date with all the latest changes in the currency market

GBP

Last week the Foreign Office minister James Cleverly spoke to a widely broadcasted news station and was reluctant to speak about India variant fears in much detail, which could imply that the UK may put the 21st of June reopening on halt. The Indian variant is the dominant strain in most UK areas which are seeing the biggest increase in cases over the last week. Although, the government still allows passengers to travel into the UK clearly carrying the variant.

The election wins for the Conservative party strengthened a hold on the country and the Scottish National Party had failed to get an overall majority. This pushed independence fears further out into the distance. The UK will have the latest jobs numbers on Tuesday with expectations for another loss of -73k jobs. Analysts had said recently that the unemployment rate could be more than double expectations, and that the furlough scheme has continued to boost the jobs market. Reopening of the economy has seen recovery for the hospitality and retail sectors and that could further increase the jobs number, however we may not see this until the months to come.

EUR

Germany saw inflation reach 2%, but economies elsewhere in the eurozone may be slow-moving. The rise in prices shows risk of stagflation and central banks having to buy more bonds to reduce bond yields. These are subject matter that have been discussed for weeks, but the market is only now catching up to the topic of inflation. European Central Banks policymaker stated that inflation could reach 3% in Europe’s largest economy and it has been said that she was limiting investor fears by saying this.

Moreover, tensions between France and the UK continues despite the Brexit agreement being signed earlier on in the year. France is aiming to delay UK financial companies’ access to the European single market until it sees that the British government is maintaining commitments on fishing rights.

USD

The Labour Department’s employment report appears that US job growth increased, but by less than expected, leaving employment at 8.2 million jobs below its peak in February last year. Economists had forecasted the number of new jobs created during April in non-agricultural business to rise from 770,000 in March to 978,000. The current unemployment rate is 6.1%, surpassing economists’ forecasts of 5.8%. US Dollar weakness continues its on-going theme as last week saw inflation data come out from the Labour Department.

Highlighting a clear surge in consumer prices in March. Their economic recovery has only just begun a long journey, as inflation could easily remain at 2.5% next year said a Federal Reserve President at the start of last week. More importantly, the Fed Governor believes the latest employment figures proves there is a long road ahead for the economy’s growth.

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