The biggest headline for the pound this week was Boris Johnson’s address to Parliament and to the public in a televised briefing revealing the roadmap out of lockdown for England. The four-step plan aims to see the economy fully reopened by June 21st. This will involve various milestones along the way, including the return of outdoor hospitality on April 12th and indoor hospitality on May 17th. Although this development was in some way already priced in, it did enough to help the pound reach a new 34 month high against the dollar of 1.4084.
Sterling never made it as far as the early 2018 high, but touching well above $1.42 on Wednesday, it got within a cent and a half of it. In a game of three halves the pound plodded higher on Monday and Tuesday, spiked upwards on Wednesday and gave it all back on Thursday. Overall, sterling lost an average of 0.2% and fell by exactly that much, a quarter of a cent, against the US dollar. The big moves on Wednesday and Thursday were technically-driven. Wednesday’s upward spike came as a result of short-covering purchasers in a thin early Far East market. Thursday’s plunge came after the pound broke short-term uptrend support against the US dollar.
The only significant UK economic data were Tuesday’s employment figures. There was plenty not to like, with fewer people in work and a five-year high for unemployment. Even the 4.7% annual increase in total earnings was arguably a negative, signifying a further fall in the number of lower-paid jobs. However, just about every component of the data was in line with or better than forecast. So investors ignored the numbers, focusing instead on the successful vaccination programme and the Chancellor’s imminent stimulus budget. In the build up to that, calls for VAT deferrals and further business rates relief are continuing to grow.
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