Market Update 31st May – 06th June

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

GBP

The British Pound has once again hit one if its highest level against the USD in nearly four years. This is due to the prospect of a strong economic recovery helped by the ongoing re-opening efforts and the rapid pace of the COVID vaccination. The UK economy is set to fully reopen on June 21st. Paving the way to return to normality as three-quarters of the population are likely to have received the two-dose Covid-19 vaccine by the end of the month.

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Also, some policymakers signalled the BOE might start raising interest rates sooner rather than expected in 2022 if a stronger than forecasted economic rebound in the UK materialises. In May sterling rose 2.8%, the second consecutive month of gains.

EUR

The EUR exchange rate could be volatile this week is a recent across the board uplift in Renminbi exchange rates leads the Peoples Bank of China to buy non-Dollar currencies in a bit to fend off pressures coming from the USD.

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There’s little domestic news over the week to majorly influence the EUR however if the BOE governor Andrew Bailey has anything interesting to say in his 16:00 speech today it could sway either way. The Indian Covid variant and speculation around it is expected to keep the GBP at bay against the EUR, with any major gains unlikely unless we receive some very good news.

USD

There could be two-way risks for the USD over the next week as key US data is being released, as well as this Fed policymakers will make an update on their evolving views of their $120 billion per month quantitative easing programme.

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As well as this last month’s non-farm payrolls missed market expectations by a country mile, potentially setting a low bar for an upside of reduced this time around. US President Joe Biden has proposed a $6 trillion budget plan for the FY2022 that would ramp up spending on infrastructure and education and provide four more years of free public education. If these plans get approved, it could rally the USD against the major currencies.

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