Last week, we witnessed the GBPEUR increase from the 2020 highs reaching 1.2000 off the back of Boris Johnson’s admission to attending a party during the first lockdown in 2020. Much speculation suggests that the rate movement was not only linked to the ‘’bring your own booze party’’, but also inextricably linked to Retail sales increasing by 2.1% reflecting a boost in consumer spending, as well as a statement released by the ONS last week stating that ‘the UK economy has recovered to its pre-pandemic levels’. These figures can be seen to be promising as we have also seen the 7-day isolation period, following a positive Coronavirus test, decrease to 5 days, suggesting we may see small increases in our labour and productive efficiency as we learn to live with Covid, therefore driving some bullish movements for the pound.
Yesterday, the Rightmove House Price Index was released to show the current strength of the UK housing market. Figures published by Rightmove stated that ‘the average price of a property in the market has increased by 7.6% in comparison to the figures published in 2021, the highest annual rate of price growth since May 2016’’. These figures can be seen as positive for the pound as this indicates growth within the economy. This past week has been said to be the ‘busiest ever start to a new year’.
Looking forward this week, we can expect the Claimant Count Change to be announced which will shed light on the number of those claiming jobless benefits where an increase in applications for jobless benefits indicate a worsening of the labour market and economic output. We can also expect to see the Retail Price index to be released by the ONS. The Retail Price index is one of the key measures of inflation as we can use this tool to measure the current cost of living – a high reading seen as bullish for the GBP.
Last week, the French Ministry of the Interior released a statement that announced the lightening of current restrictions at the borders for UK vaccinated travellers. This came to light as the Omicron variant is now widely spread throughout both France and the UK, however, travellers will still need to show proof of a negative covid test 24 hours before arrival.
Although figures are set to be officially announced today, yesterday the German Buba Monthly Report was released by Deutsche Bundesbank, which is said to contain various articles, statistics and data to provide an in depth and detailed analysis of the current/future conditions of the economy. This could shed some insight into the current and upcoming movements for the EUR as we use this data to indicate the direction of the Euro following Germanys recent report, showing an annual GDP growth rate of 2.7%. GDP is one of the main indicators we can use to measure changes in economic growth as an increase reflects increasing production rates and demand for goods which can be seen as positive for the EUR.
Looking ahead, we can expect to see the Current Account to be released by the ECB which measures the net flow of goods, services and payments coming in and out of the Euro-zone. A surplus of the Current Account will be seen as positive for the EUR.
The ECB will also hold a Monetary Policy Meeting which will contain an overview of the financial, monetary and economic conditions of the market.
Last week, Federal Reserve Chairman, Jerome Powell, announced official figures stating that US inflation reached a multi decade high of 7% in December. In response to this, the FED have suggested that they may not only raise interest rates to combat inflation, but they may also reverse their quantitative easing programme to combat the ever-growing inflation levels. Driving down inflation can have positive effects on the USD due to increasing its value over time.
Later this week, the initial Jobless Claims will be announced that sheds light on the current condition of the US labour market. A decrease in the figures is seen as positive for the USD linking to an increase in productive efficiency within the US economy and therefore increased output.
It may also be worth keeping an eye out for the Total Net TIC Flows released by the US Department of Treasury. This data reflects the US net financial resources and is also one of the major events in the market as it is seen as a government resource to forecast the current trade deficit. A high reading is seen as bullish for the USD. For more information on currency movements, please contact your Personal Account Manager here at Lumon.
This blog post is intended to provide This blog post is intended to provide you with information on the services Lumon Pay Ltd (“LPL”) offer and should not be interpreted as advice or as a solicitation to offer to buy or sell any currency or as a recommendation to trade. Foreign exchange rates provided therein are for indicative purposes only and are not intended to give an accurate reflection of current currency exchange rates or to predict future movements in currency exchange rates. LPL, trading as Lumon, is a company registered in England with its registered address at Building 1, Chalfont Park, Gerrards Cross, Buckinghamshire SL9 0BG. LPL is authorised by the Financial Conduct Authority as an Electronic Money Institution (FRN: 902022).