Sterling remains firm due to possible rate hike
Daily Currency Update
GBP - British Pound
UK manufacturing and services PMI readings came in better than expected on Friday. Monthly retail sales figures were also released which showed a negative 0.2%. Sterling saw little movement on the data releases, as it remains supported by the possibility of a rate hike in November. New chief economist Huw Pill said he expects inflation to hit 5%, which, amongst other factors, prompted comments from Bank of England Governor Andrew Bailey that the bank will “have to act”.
Sterling opens higher this morning, despite news headlines that suggest plan B could be put into action in the UK in an attempt to tackle ongoing COVID-19 concerns. This could see the reintroduction of working from home and a mandatory return to wearing masks. The reason for Sterling’s gains is down to positive news on the Northern Ireland protocol which suggests there is room for compromise over the impasse. GBP/USD falls just under 1.3800 and GBP/EUR remains above 1.1800.
Key Movers
This week’s main data event comes from Europe after a quiet week for the Eurozone has just passed. The European Central Bank’s pandemic emergency purchase program (PEPP) is due to end in March and it’s what could happen to these asset purchases that will be of interest on Thursday. There are expectations it could become part of a new broader based asset purchase program. Commentary over when rates are predicted to rise will also be of interest.EUR/USD currently sits at the higher end of 1.1600 having been below this figure at the start of last week.
Expected Ranges
- GBP/USD: 1.3740 - 1.3860 ▲
- GBP/EUR: 1.1810 - 1.1870 ▲
- GBP/AUD: 1.8340 - 1.8480 ▼
- EUR/USD: 1.1620 - 1.1670 ▲