Over the last week, we saw Sterling exchange rates rise above 1.17 against the Euro before closing the week at a level of 1.1650. Sterling has remained slightly weaker against the U.S Dollar as investors have flocked to the Dollar for safety recently given more uncertainty surrounding the markets.

Over the week we did have some positive speeches from BoE members which indicated that the Central Bank is ready to cut quantitive easing and potentially look at hiking interest rates to combat rising inflation (Which came in at 2.5% last week). This was seen as a net positive for the markets and strengthened Sterling- but unfortunately, the move was unable to sustain through the week.

Though the Central Bank talk is positive- the real thing we have to be looking at (Not just in the UK, but Globally) is how the pandemic will be through unlocks. 19th July marks “Freedom Day” where all restrictions will be lifted, but cases seem to be rising in the UK at a rapid rate which seems to have many people nervous- with cases at around 50k per day- it does seem likely the UK will be at 100k cases a day pretty soon. The real test here is hospitalizations, and this really should be the proof of whether the vaccine is effective or not- if hospitalizations and deaths stay low- then I think the country is ok to move forward- but we will have to see how things play out. The latest Covid spike will also be telling on how the UK economy will recover moving forward, so far the recovery has been slow- and the hope is that this latest spike doesn’t keep things down.

As far as this week is concerned, the first main event I am watching is the ECB interest rate decision on Wednesday- with many Central Banks now looking at tapering- it will be interesting to see what Europe does this week and how they plan on next steps as far as monetary policy is concerned. U.S Jobs data on the same day will also be interesting- with more jobs added last week, a continuation of this trend will support the Fed tapering QE and moving to next steps for monetary policy. Lastly, on Friday UK will be releasing retail sales figures which are expected lower for last month- this could have been due to worse weather in the UK and uncertainty surrounding coming out of restrictions- any change in this data could move the markets.