Pound-Dollar briefly hits 2020 high
We start with the continued weakness of the $, as Sterling gains 1.5% in just 48-hours. Yesterday saw record highs on the Nasdaq and the S&P 500 markets, which propelled the Pound across the board and caused the Dollar to weaken. £-$ rates have risen 16 cents since March's flash crash..
Inflation figures released from the UK earlier today showed a higher than expected number for July, which ensures the BoE will continue there wait-and-see approach. The increase is supportive of the Pound as the lower inflation number, the higher chance of negative interest rates. The downside to higher inflation is the cost of goods, fuel etc to the consumer as demand is greater.
So Sterling optimism is in full swing and BoE Chief Economist Andy Haldane echoes the same view with his continued bullishness of the UK's recovery. Haldane said in an article over the weekend "The foundations for an economic recovery, a rapid one, are already in place, hiding in plain sight. Economic activity in the UK is not falling like a stone, in fact it has now been rising for more than three months, sooner than anyone expected. It has also recovered far faster than anyone expected."
Again, PMI Friday is the main economic event of the week, which will give us a sense of how the recoveries are progressing. The numbers from the EU, UK & US are expected to rise again for the month of August as countries continued to ease Covid restrictions. Any surprises in the results will move the £.