Pound jumps to two-week high against dollar as UK economy to bounce back from recession

HomeFinance

Pound jumps to two-week high against dollar as UK economy to bounce back from recession

Sterling had a strong first quarter, supported by dwindling expectations of negative interest rates and by a fast roll-out of vaccinations against

More cancer patients bounce back as Ostomy Studio moves its rehab fitness sessions online
Bounce Back Loans: How do they work? Can you claim before the scheme closes?
Tottenham chief Daniel Levy urged to bounce back from blow with Eddie Howe appointment


Sterling had a strong first quarter, supported by dwindling expectations of negative interest rates and by a fast roll-out of vaccinations against COVID-19 across Britain. As shops, hairdressers, gyms and pub gardens re-open across England, analysts expect a faster economic recovery in the UK than the European Union, which is struggling to contain a devastating third wave of infections.

Traders will be watching PMI surveys for the UK, together with data on the labour market, inflation and retail sales this week.

Both ING and UniCredit analysts told clients there was scope for sterling to strengthen to $1.40 this week.

Chris Turner, Global Head of Markets at ING, said: “The pound continues to find support on dips and it seems like investors are happy enough staying positioned for the 2Q UK re-opening story.

“Today we have already seen some encouraging April Rightmove house price data.”

The Rightmove property website said advertised prices for homes in Britain hit a record high after finance minister Rishi Sunak stoked the market again by extending a tax cut for home-buyers last month.

Speculators’ net long position on the pound versus the dollar rebounded in the week to April 13 after slipping to its lowest since February in the previous week, futures data from CFTC showed.

Versus a weakening dollar, the pound rose 0.4 percent to $1.3900, its highest level since April 6. It was 0.1 percent lower versus the euro at 86.61 pence, after it hit its highest of 86.30 pence since April 8.

Neil Jones, Head of Foreign Exchange Sales at Mizuho Bank said: “Current domestic Covid data is encouraging and a further easing of lockdowns will all point in the direction of the UK economy early out of the block on economic recovery expectations.”

READ MORE Brexit bonanza: Unshackling from EU lands UK £4billion shot in the arm

The optimism spread to the FTSE 100 with British shares on the rise and and midcaps hitting a record high as gains in industrials and consumer discretionary stocks underpinned the market.

The blue-chip index edged 0.1 percent higher in choppy trading, with gains being capped by a 0.8 percent decline in heavyweight energy shares as they tracked lower oil prices.

Drug firm AstraZeneca rose 0.4 percent, and was among the biggest boost to the FTSE 100 after the Philippines said it will resume administering its COVID-19 vaccine to people below 60 years of age.

The domestically focussed mid-cap FTSE 250 index also gained 0.4 percent to touch a record high.

With the FTSE 100 gaining 8.7 percent year-to-date and UK vaccine rollout continuing to progress, the markets will have a chance to gauge the impact on the economy as employment data, retail sales, CPI, PPI, and flash April PMIs are all due this week.

Homebuilders added 0.6 percent on the Rightmove figures and chemicals firm Johnson Matthey rose 0.9 percent after it signed a long-term agreement with Russian metals producer Nornickel for the supply of nickel and cobalt to produce materials used to make electric vehicle batteries.



COMMENTS

WORDPRESS: 0
DISQUS: 0