The pound to dollar rate spent the majority of last week tumbling from the two-week high it touched on Tuesday, having edged above the 1.39 benchmark. By Friday, a dearth of economic data and concerns surrounding the future pace of the UK’s aggressive vaccination drive had dragged the pair to a two-month low – its biggest weekly drop so far this year. Supply issues from Oxford-AstraZeneca – the most used jab in the UK – have slowed the progress of vaccinations in recent days. Meanwhile, medical regulators advised that under-30s should not receive the Oxford-AstraZeneca vaccine in a “course correction” to the UK’s rollout – a decision that was prompted by fears the jab is linked to blood clots.
The pound to dollar rate bounced off its low of 1.367 on Friday, allowing it to settle above the 1.37 benchmark over the weekend. Helping it pare its losses were reports that average house prices in the UK hit a record high last month, following the announcement of a range of measures in the spring Budget to help buyers. Data from Halifax showed that house prices rose 6.5% annually, or £15,430 in cash terms.
Plans set out by chancellor Rishi Sunak in March included a new mortgage guarantee scheme to help buyers with a 5% deposit get on the property ladder, and the extension of the stamp duty holiday on property sales of up to £500,000 until 30 June.
US Producer Prices Increase More Than Expected in March
The dollar’s slight recovery on Friday rounded off a soft week for the US currency after surprisingly weak US jobs figures the previous day and ongoing loose Federal Reserve policy deterred investors. On Thursday, Fed chair Jerome Powell used an economic forum to underline the central bank’s plans to keep monetary policy super-easy.
Providing the dollar with some much-needed impetus were reports that US producer prices increased more than expected in March, recording the largest annual gain in over nine years. The surge matches expectations for higher inflation as the economy reopens amid encouraging vaccination rates and massive government funding.
The producer price index (PPI) for final demand leapt 1% in March after increasing 0.5% in February, data released by the Labor Department showed on Friday. In the 12 months through March, the PPI jumped 4.2% – the biggest year-on-year rise since September 2011, following a 2.8% advance in February.
With lockdown restrictions set to ease further in England today – in line with the government’s roadmap – and new data showing Covid-19 cases have plummeted to a level not seen since July, the pound could be toasting economic optimism this week.
The British Retail Consortium Like-For-Like Retail Sales figures – a measure of the performance of the retail sector – are set for release this evening.
In the US, the Monthly Budget Statement for March is forecast to improve but remain firmly in deficit.
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