– Currency exchange rates on 15/3/2021:
– GBPEUR spot rate is +0.09% higher at 1.1668.
– GBPUSD spot rate is -0.11% lower at 1.39149.
Pound (GBP) Exchange Rates Steady on Slow Data Week for Sterling
The Pound to Dollar (GBP/USD) exchange rate hovered around the 1.3930 level early on Monday morning. A slow start to the week was to be expected, but things may not stay that way as a busy week of central bank meetings lies ahead of us.
Naturally, the Bank of England and FOMC decisions stand out for Cable, with the latter comfortably the most important event of the week.
“We expect Bank of England to reflect the vaccine roll-out success via a more upbeat tone that fully commits to discarding NIRP as a possibility (for the time being), and also do note that the US is now clearly the Western economy with the best vaccination momentum. Johnson and Johnson doses are already being put to use, while the EU-members don’t expect to see any doses from JnJ until late in April” say analysts at Nordea.
British coronavirus cases are stabilizing at lower levels, with deaths, in particular, continuing to decline at a rapid rate.
Markets have probably priced in that the U.K.’s ambitious plan to reopen is on track, but that might not necessarily be a hindrance to the Pound’s rally.
EUR/GBP continues to hold near its lows, tantalizing bears of another breakout.
Euro (EUR) Underperforms on Exchange Rate Markets
The Euro was an underperformer this morning, lagging its major peers as EUR/USD dropped 0.08%. A big issue causing problems for the Eurozone is that its slower vaccination drive appears to have impacted its ability to keep its cases down. Italy appears to be on the verge of another wave, while German cases are also ticking up. None of this is great news for a currency that was already looking at a slower exit from the pandemic lockdowns before its cases started picking up again. It is true that Italy has often been ahead of the U.K. and U.S. in dealing with the pandemic, but this trend has likely been broken by vaccination efforts.
READ: GBP/EUR Forecast: Is 1.17 Possible For Pound To Euro Exchange Rate Buyers This Week?
US Dollar (USD) Exchange Rate Outlook Looks up on
It’s all about the upcoming stimulus payments in the U.S., with stocks rising in anticipation of the impact of a simply massive $1.9 trillion stimulus injection. Such is the magnitude of this intervention that some are getting very antsy about inflation, and that’s potentially good news for the Dollar.
Economists at Nordea FX believe that inflation is coming, and anticipate that Powell’s cool calm, and collected approach will not be sustained as the CPI spikes into summer, as they stated in a recent report,
“Jay Powell will be faced with a truck-load of inflation questions on Wednesday, and if he keeps referring to inflation being allowed to “moderately overshoot”, then we should expect long bond yields to continue up since inflation expectations will likely follow. Inflation will not just “moderately overshoot” as several of our prime indicators on inflation hints of 2.75-3% core inflation before summer, and will Jay Powell then be able to calmly reiterate that inflation will be allowed to overshoot moderately? We doubt it”
READ: Outlook For Pound To Dollar Exchange Rate Today: GBP/USD Firms Amid Correction In US Treasury Yields
Other Majors
China’s unemployment rate rose to 5.5% on Sunday, while its industrial production data jumped to 35%.
A mixed bag weighed on the Australian dollar which fell 0.2%.
Japan’s Yen was 0.1% lower in risk-on, while China’s Yuan was quite a bit weaker as USD/CNH rose 0.22% after the data release.
The Day Ahead
There isn’t much data on the slate today, as NY empire state manufacturing and New Zealand’s Westpac consumer sentiment are the only real eye-catching releases.
Look for headlines around stimulus and expect general risk-on sentiment to drive markets. Bitcoin rallying above $60,000 will probably draw some attention.
