UK inflation up, unemployment down
The Pound has had a good week so far, despite a global covid surge that has unsettled markets. Yesterday, £-$ rates touched 1.40 which was a 6-week high and £-€ is up 0.5% on the week so far. But, global investor sentiment linked to surging global coronavirus cases has kept the Pound grounded.
Sterling is what's known as a 'pro-cyclical currency' (amongst other names), which means it benefits when the global economy is rising and investor sentiment is positive. Yesterday, the stock market was hit due to growing concerns of infection rises in Asia mainly. In fact, Europe (even though many nations are in the midst of a third wave of coronavirus) is the only region where covid cases are not rising currently. The $ has therefore pegged back some of its recent losses due to it being a safe-haven currency and the € has benefited slightly also.
The UK has produced some good data so far this week though, which has aided in £ strength. Firstly, there was a surprising fall in unemployment with the rate falling to 4.9% from 5.0%. Economists had predicted a slight uptick to 5.1%, which has been the steady increase level since May last year. Then the rate of inflation pushed higher ahead of the easing of lockdown restrictions this month. CPI rose to 0.7% in March, up from a dismal 0.4% in February. The next two days will see the more important data releases, so expect some volatility.