Markets await US inflation data

Daily Currency Update

It was a relatively uneventful day for the pound yesterday with little top tier data of note to move the currency. Huw Pill who is the Bank of England's chief economist took part in an online conference about the outlook for UK monetary policy and stated that he would rather see a "measured" approach to the Bank's interest rate hiking path with nothing too aggressive that could impact the economy, with consumer spending power already being squeezed by rising energy costs as well as a planned rise in National Insurance due in April. This morning Bank of England, Governor Andrew Bailey, is due to speak in an online event hosted by TheCityUK so it will be interesting to see how his views compare to Pill's. Markets are currently pricing in another couple of interest rate hikes at the next two meetings. However it will then be interesting to see what they do should inflation start to come back down in the Spring.

In Westminster yesterday at Prime Minister’s Questions Boris Johnson confirmed that all Covid-19 restrictions would come to an end in England at the end of February, a full month earlier than was originally planned. With infections on a steady path down (yesterday saw 68k) the PM now sees it appropriate to move completely to a strategy of living with the disease. The legal requirement to self-isolate after an infection will come to an end however there is concern that this could put some with underlying health issues at risk. GBP/USD is drifting a little higher this morning currently trading around 1.3550. GBP/EUR is starting to claw back some of the big losses saw last week with it up to around 1.1860.