- Pound Closing in on Record High
- Dollar Pressured by Risk-On Mood
- Markets Continue to Rebound
Both the Euro and Pound forex market have thrived entering this week with the former on a strong run as Europe continues to vaccinate and ease off on restrictions. The Pound meanwhile is nearing a three-year high point as the unemployment rate has dropped there signaling that progress is being made in the battle against COVID-19. Also at play is a weakening US Dollar as markets continue to rebound from their slump, and the Fed sticks staunchly by its assessment that inflation will simply be a transitory issue.
Employment Surprise Helps Boost Sterling
The GBP had already been in a position of some strength for those forex trading the cable heading into this week. This position has been further solidified by very strong data coming from the UK. In particular, the focus has been on jobs and the unemployment number which surprised analysts, coming in below estimates at only 4.8%. Upbeat Brexit news in a resolve to deal with Northern Ireland trade issues has also helped the Pound.
The fact that the UK continues to step back from social restrictions as an increasing number of the population receives their COVID-19 vaccinations is also a big factor in the story. Anyone from the age of 35 is now eligible to receive the shot, and the first groups of people have started to take vacations to other nations on the UK green list.
Weakening Dollar Gives Green Light
On top of the strength forex brokers have noted from both the Pound and Euro major currencies, the US Dollar has provided a helping hand. This comes as a more positive market sentiment takes over from last week’s worries around inflationary pressure. The Federal Reserve and that of US states have all done their part in sticking by policy and supporting the thought that any such inflation will be transitory.
How long this period may last is unknown, but it appears to have soothed fears from traders at the moment. At the same time, the US Dollar Index which measures the strength of the Dollar against major forex currencies around the world has dropped below 90 points. This is a further indication of Dollar weakness and the willingness of traders to venture beyond the safe haven.
Wall Street Continues to Bounce Back
Following on from a rollercoaster week, this one has started on a much more positive note for the markets. Major indices were down yesterday, though only marginally after a strong finish to last week. Futures trading also appears to be positive as tailwinds from a global reopening start to take hold.
A confluence of factors, including the continued Fed dismissal of inflation, and the maintenance of yield rates at lower levels have allowed traders to return confidently after a sell-off last week. This is evident particularly in the tech-heavy NASDAQ as it looks for a strong rally at the opening bell today.