The pound to dollar rate continued recovering its losses on Friday, following downward pressure that caused it to slump to 1.36 for the first time in almost seven weeks on Wednesday. Renewed warnings from European leaders about limiting vaccine exports did not curtail the pound to dollar rate’s progress. Instead, market participants focused on Britain’s generally upbeat vaccine rollout and economic outlook.
Speaking after a meeting of European leaders on Thursday, EU commission chief Ursula von der Leyen said AstraZeneca will be unable to export Covid-19 vaccines from Europe until its contracts with the EU are fulfilled. However, Angela Merkel said the EU hopes to establish a “win-win” situation with Britain regarding vaccine supplies. The German Chancellor’s positive outlook was shared by the UK government, which confirmed that the nation has sufficient supplies to vaccinate all adults by the end of July.
Retail sales increased by 2.1% in February from January as spending on home improvements and garden furniture surged ahead of the easing of restrictions today. This represented a modest comeback for the retail sector during the UK’s third lockdown.
Cold Snap Reduces US Consumer Spending
The dollar was presented with a mixed bag of data on Friday, following a week that revealed US jobless claims fell to a one-year low and President Joe Biden said he would double his vaccination plan – activity which generated optimism about the US currency, helping to send the pound vs dollar rate lower.
The US Bureau of Economic Analysis reported on Friday that US personal income declined 7.1% on a monthly basis in February – slightly better than market expectations for a decrease of 7.3%. Further details of the publication revealed that US personal spending, which accounts for more than two-thirds of domestic economic activity, contracted by 1% during the same period, exceeding analysts’ estimate of 0.7% – the most in 10 months as extremely cold weather gripped many parts of the country.
The Michigan Consumer Sentiment Index registered at 84.9 above expectations (83.6) in March – the highest reading since the pandemic began. Anticipation of largescale stimulus checks in President Biden’s relief package, improving Covid-19 cases, and the nation’s rapidly expanding vaccination programme fuelled the uptick in consumer confidence. For example, the US government recently hit its goal of issuing 100 million vaccination jabs 42 days ahead of schedule.
Tomorrow’s consumer confidence reading, and housing price index are the first figures of note from the US.
Markets must wait until Wednesday for notable data from the UK economy when the latest gross domestic figures are released.
You can get in touch ahead of Wednesday to find out more about the potential impact of GDP data coming out of the UK to discuss how your pound to dollar exchange could be impacted.