11/05 – GBP continues to fly high

Jeremy Thomson-Cook
Jeremy Thomson-Cook 11 May 2021

GBP: Pound hits new highs following UK and Scottish Elections

EUR: Still well supported in markets as risk sentiment increases

USD: Bearish bets increase

GBP

Sterling rallied throughout the course of yesterday with political certainty being the key driver for once.

With political uncertainty being the key prohibitor on sterling’s performance over the last few years, the currency took some respite following local elections in the UK and Scotland

The Conservative party drew success from local elections, securing Boris Johnson’s position at the helm with Labour in disarray. Whilst the SNP won in Scottish elections, they failed to win a full majority in the Scottish Parliament thus reducing any near term chances of an independence vote. The likelihood is that the SNP will form a government with the Green party who are also pro-independence, but market concerns of a call for an independence vote seem to be a longer term concern than anything to be concerned about in the near future.

So with the major stumbling block for the pound now in the past, it looks like further moves for the pound will be dictated by economic performance and if the economy performs as well as the Bank of England alluded to last week.

EUR

No major movements or news from the Eurozone resulted in a very rangebound day.

The Zew survey on economic sentiment came in higher this morning, resulting in another push for the EUR to help it hit new highs against a languishing dollar.

USD

The dollar continues its torrid one-month move, with the dollar index now at the lowest level since February. Last Friday’s job figures appear to be a concern for markets with bets on further weakness for the US dollar seemingly increasing

An increase in the inflation print on Wednesday could well give reason for markets to support the US dollar with analysts expecting inflation to have risen from 2.6% to 3.6%.

Market rates

Today’s interbank rates at 11:43 against sterling. Movement vs yesterday.

Euro €1.162 ↑
US Dollar $1.413 ↑
Australian Dollar $1.802 ↑
South African Rand R19.75 ↑
Japanese Yen ¥153.7 ↑

Have a great day.