Welcome to Orbis Exchange Group’s market update.

19th-25th April 2021

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

Great British Pound

With supply issues causing the UK’s vaccination campaign to come off track, the Pound’s success has slightly worn off.

But the loss of its vaccine-related advantage is not the only cause for concern for the GBP as it faces other headwinds in the short term as well.

The International Monetary Fund (IMF) updated its UK growth forecast to 5.3% growth in 2021, but that was ahead of the latest figures. The IMF prediction would see the UK as the fastest-growing G7 country for the year.

£3billion has been spent across pubs, restaurants, retail and hairdressers etc.

Since the UK re-opened their economy last Monday, it has been recorded that £3billion has been spent across pubs, restaurants, retail and hairdressers etc. This highlights that revenge spending is happening and is very likely to continue.

However, GDP is now -7.8% below the pre-virus levels compared to analysts’ expectations of -8.6%.

The most affected sector was the services again, which was 8.8% below its pre-virus mark. The sector grew only 0.2% in the month with shops still shut, but services PMIs and re-hiring seen last week could point to better days in the coming months.

Tomorrow we have the Claimant Count Rate released by the National Statistics. This will show the current unemployment figures in the UK since the reopening of the economy last week. If there is a decrease, then Sterling could see another push over the 13month highs that GBP EUR has been trading at.

Eurozone inflation data

Last Friday we saw the Eurozone inflation data come out, and expectations were met as there was a dip to 0.9%. This is mainly due to the economy being in lockdown.

January’s slump in exports.

A softer inflation number will please the European Central Bank, but it will not do much to shift the GBPEUR outlook. The balance of trade figures released at the same time may help after January’s slump in exports.

The February figures for the UK saw a normalization of trade

The February figures for the UK saw a normalization of trade after a big drop in January exports as companies struggled to react quickly to the last-minute Brexit deal.

Exports in February helped the UK to a 0.4% GDP improvement

The number of goods shipped to the EU rose by 46% from the previous month. Exports are still below 2020 levels but will become steadier in months to come and will provide a clearer picture of Brexit’s impact.

Eurozone call for another lockdown

The country’s health minister was calling for another lockdown on Thursday, which implies that the Eurozone is still struggling with COVID-19 cases.

US Dollar

Last week US weekly jobless claim fell to lowest pandemic level. The USD saw a lot of pressure from falling Treasury yields, which pulled back from last month’s surge.

Federal Reserve will keep interest rates low for a prolonged period

Now investors are convinced that the Federal Reserve will keep interest rates low for a prolonged period. These yields are offering little support for the US dollar as they have been stuck in a tight range in recent months, despite rising historically.

Further, US shoppers boosted spending in the retail sector last month. Proving that the government’s stimulus funds positively impacted American households. The economy reopened more as well from lockdown restrictions. This meant retail sales jumped by 9.8% in March.

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