Sterling exchange rates have seen a couple of weeks of non-stop gains, predominantly against the Euro with exchange rates going above 1.18 on Friday. The latest Bank of England meeting supported Sterling with talk of tapering Quantitative Easing and eventually putting interest rates back up over the coming years- which was welcome news in the financial markets. With this stance from BoE, it is hard not to be bullish on Sterling moving forward.
This week we will be waiting to see how UK GDP figures come out Thursday- the forecast is we should see 4.8% growth, which would be higher than 3.6% last time- however with bad weather over the last month and uncertainty surrounding the delta variant, I am uncertain as to how accurate this prediction will be. The GDP numbers will be the main driver this week for Sterling- so we may see some sideways action until then- as May’s GDP was underwhelming, traders will be nervous going into the release- but if we do see a positive number, it is likely Sterling will rise.
Generally speaking the main concern at the moment is the Delta Variant in the U.S- with strong NFP numbers last Friday we are finally seeing the economy enter recovery where jobs are concerned, but rising hospitalizations are concerning at the moment and makes it tough to predict next steps- vaccinations rollouts are being accelerated across the board and hopefully, we see a big difference in this over the next month.
There is also news of the UK rolling out a booster jab come September for those in high-risk categories- which hopefully means no restrictions come, Winter if people are protected by a booster jab and the flu jab over the next couple of months.
We also have more jobs data out of the U.S this week- what we are expecting to see is a continuation of the growth we have begun to see and hopefully, fewer jobless claims both initial and continuing.