The pound fell out of bed on Monday morning as the alarm sounded on another new week. It wasn’t long before it had perked itself up, however, rising sharply back above the 1.38 level – picking up where it had left off at the end of last week. Softening concerns about the UK’s Covid-19 vaccine supply from the EU continued to turn around some of the currency’s recent losses. Last week the EU refrained from imposing a ban on vaccine exports; a proposal that had raised concerns in the UK, which depends on imports of inoculations for its rapid vaccination programme – the pace of which has benefited the pound in recent weeks.
Economic data from the UK economy was thin on the ground on Monday. However, a monthly report by the Band of England showed that a slump in credit card spending last month reduced UK consumer credit growth to a 27-year low. Consumer credit growth fell by 9.9% annually – the biggest contraction since records began in 1994 – as people paid back more than they borrowed.
Prior to the spring Budget, the stamp duty holiday was scheduled to end in March. This led to a rush to secure mortgages before the initial deadline, causing mortgage approvals for February to rise by 20% from the same month last year. The data from the Bank of England reveals a slight slowdown from borrowing levels seen at the start of the year. However, borrowing levels in February still exceeded those seen before the global financial crisis in 2008.
Despite another stage of prime minister Boris Johnson’s roadmap out of lockdown taking effect yesterday, the pound vs dollar rate’s push higher didn’t last long – by this morning the pair had slipped back to 1.37. The pound’s cause wasn’t helped by reports of a potential tit-for-tat tariff war between the UK and US over the imposition of a “digital services tax” that will deal a blow to Silicon Valley tech companies.
More Signs of US Economic Recovery
The improving US economic outlook and the speedy pace of the vaccination programme across the pond have created encouraging conditions for the dollar lately. The US economy’s better than expected recovery was further demonstrated yesterday by the latest Dallas Fed Manufacturing Business Index, which rose to 28.9 for March from 17.2 in February – economists had expected it to fall to 12.1.
Looking Ahead for the Pound to Dollar
A barren day in the UK’s economic calendar means tomorrow’s gross domestic product figures – which are forecast to hold steady – are the first releases of note this week. AUD to GBP Rate Aims for Third Day of Gains
Today sees the release of the consumer confidence reading for March and the housing price index from the US. Use the for below to get in touch and discuss these factors in further detail ahead of your currency exchange.