Crucial data week ahead
So today marks phase 3 of the roadmap out of lockdown which sees indoor dining and entertainment re-open in the UK. It will be a few weeks from now until we hear of how much the economy has improved since the easing of these restrictions, but positive sentiment alone should lift the £ in the days/weeks ahead.
For many analysts the Pound is cruising along in the market at the moment after what was a tough April. Sterling has consolidated around £-€1.15 & £-$1.39 of late and with the constant improvement of UK economic data, we should continue to see support for GBP and finally push rates up to the desired £-€1.18 & £-$1.45 levels.
With politics taking a back-seat for now, new virus risks (specifically the Indian covid-19 variant) are seeping onto the markets radar. Sterling took a slight hit last week after both the Prime Minister & Foreign Office Minister suggested that the final phase of the roadmap could be delayed next month. If the Government moves the goalposts again, there is no doubt the £ would decline.
This week is all about economic data though and the forecasts suggest it could be a good week for GBP. Last month's jobs data surprised the market and we could well see similar again this time round. After the BoE announced that they won't be drawn into lifting interest rates by temporary price pressures, the inflation release could be a non-event on Wednesday. However, the US' recent high number triggered instant $ strength, so we may see some upside here as the figure is likely to double from previous month.
The main day for market volatility will come on Super-Friday with the PMI's taking centre stage. This will provide insight into consumers' propensity to spend coming out of lockdown, as well as the current health of key sectors. The UK has been smashing PMI targets all year and this month should be no different. The Euro-Zone has also been producing strong PMI's of late and they too release key data with GDP & inflation.