Welcome to Orbis Exchange Group’s market update.
Where you will be able to keep up to date with all the latest changes in the currency market.
Great British Pound
Following last Monday’s announcement from Boris Johnson that the “third-wave” currently hitting the European continent is likely to have an effect on the U.K, we saw GBP begin to weaken from the 12-month high we had seen against the Euro in the previous weeks and a further fallback against the US Dollar. .
Positive employment data
This created increased uncertainty in the market, but in the week that followed we saw positive employment data which indicated that unemployment is falling despite lockdown- showing the effectiveness of the furlough scheme.
This positive news was followed by retail sales data which indicated that U.K spending is encouraging for post-lockdown life and the economy may be in a good position to rebound.
Over 30 million people have now received their first vaccinations against Covid-19
Following this we saw the Pound begin to rise by over 1% against the Euro from the month-long lows we saw on Monday. Over 30 million people have now received their first vaccinations against Covid-19 and the U.K has begun its second phase in opening the economy. This includes the return of meeting people from outside your household, and the return of outdoor sports. With the death count falling further, it does look increasingly likely that the U.K is on track for fully opening the economy in June.
Vaccine passports will be rolled out in the U.K
Over the next week we will look for further updates on the opening of the economy from Government, but we also have GDP data on Wednesday for Q4 which will give a clearer indication of how the economy has been responding to further lockdowns. We also expect further news on the extent to which vaccine passports will be rolled out in the U.K which will indicate just how open the economy is expected to be. They could affect consumer spending which would in turn devalue GBP.
Over the past weeks, we have seen the European Union engulfed in a “third-wave” of Covid-19 cases.
This has seen Germany recording the highest levels of cases they have seen, and another lockdown in Paris, where they have seen another spike in cases.
Experts are suggesting these countries are being affected worse due to the lower levels of vaccinations they are seeing as opposed to their British and American counterparts which would help to prevent the spread. This has come from a mixture of lack of supply and scaremongering tactics with 60% of the French population considering the AstraZeneca vaccine as “unsafe”.
We saw the Euro rise to a three-year high against the USD in January,
but since we have seen a 4% drop-off as many believe the European Economic Area will be significantly slower to open as opposed to other economies.
New lockdown may affect future economic development
This week we saw CPI data for the EEA on Wednesday which will give an indication of the position of the economy of the continent and we also have retail sales for Germany which may give an indication of how much their new lockdown may affect future economic development.
Following Joe Biden’s taking the helm of the Presidency in January, the US Dollar began to fall off significantly off the back of a large stimulus plan and a large-wave of Covid-19 cases.
US massively ramp up production and distribution of vaccines
However, since February, we have seen the U.S massively ramp up production and distribution of vaccines. The production of the Johnson & Johnson vaccine, which is one-dose, and produced in the United States has led Joe Biden to believe the they have the capability to vaccinate every adult by the end of May.
This has rallied the U.S Dollar back from the 3 years lows we saw against the Euro and the Pound.
Last week we saw that GDP for the United States increased by 4.3% in Q4 which was higher than many analysts expected, indicating the U.S is in a good position for the potential end of lockdowns.
Analysts are predicting for both these forecasts to rise which could lend the Dollar some support.
U.S Stock Market has rose to the highest level
We have also seen, despite Donald Trump’s departure, that the U.S Stock Market has rose to the highest level we have seen. Jerome Powell also spoke before congress with mild optimism of future economic progress for the United States. These positive signs have seen the EUR/USD rate fall back to the lowest level we have seen since early December.
New jobs created
Over the next week we have Non-Farm payrolls released showing the number of new jobs created in the last month, which is expected to show a large increase, if this is the case we could see the US Dollar strengthen further as the U.S Jobless figure was massively effected throughout the pandemic.
Future plans regarding lockdowns
Joe Biden will also address the nation Wednesday about future plans regarding lockdowns and vaccines, and we expect this will affect the rate dramatically.