Pound (GBP) Rises as Outlook for UK Economy Improves Following Lockdown Exit Plan

Published: 24 Feb at 12 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany,

Pound (GBP)

The Pound rose today as confidence in the UK economy continues to grow following Prime Minister Boris Johnson’s outline of a lockdown exit strategy earlier this week.

As a result, GBP investors are now more optimistic than before that the nation could be one of the first countries to recover its economy once lockdown restrictions are eased.

Michael Hewson, an analyst at CMC Markets, explains:

‘The Pound has continued its advance to multiyear highs against the US dollar, as markets take the not unreasonable view, barring some serious missteps from the government, that the UK economy will probably be one of the first major economies to start to ease restrictions in the coming weeks.’

Euro (EUR)

The Euro continued to struggle today despite German GDP data being revised upward in the fourth -quarter of last year to 0.3%.

However, with harsher lockdown restrictions in place at the beginning of this year, the outlook for the Eurozone’s powerhouse economy remains bleak.

Carsten Brzeski, an analyst at ING, commented on the report:

‘[The] stricter lockdown measures since mid-December, the harsh winter weather in February, a reversal of any pre-Brexit hoarding in the UK and weaker foreign demand at least from other eurozone countries have increased the risk of an unwelcome rotation. The growth drivers of the fourth quarter could easily become drags in the first.’

US Dollar (USD)

The US Dollar edged lower this week following testimony from the Federal Reserve’s Chairman Jerome Powell.

Mr Powell was overall dovish about the US economy, despite saying that the outlook for the world’s economy had improved since 2020.

As a result, USD investors have remained cautious as the US is still set to announce US President Joe Biden’s stimulus package.

Instead, US markets are holding steady as lawmakers are expected to push through the stimulus package later this week.

Canadian Dollar (CAD)

The Canadian Dollar fell this week as oil prices have stalled, with WTI crude prices currently around $61 per barrel.

Consequently, demand for the oil-sensitive ‘Loonie’ has been capped as investors continue to eye developments in oil markets.

Australian Dollar (AUD)

The Australian Dollar has benefited from upbeat market mood this week, with investors more open to investing in risk-sensitive currencies like the ‘Aussie’.

Added to this, confidence in Australia’s economy rose following a stronger-than-expected Australian Wage Price Index.

New Zealand Dollar (NZD)

The New Zealand Dollar rose today following last night’s bullish Reserve Bank of New Zealand (RBNZ). The RBNZ presented an upbeat forecast in their first policy meeting of this year.

As of Wednesday, 24th February 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1624, GBP USD exchange rate was 1.4148, GBP AUD exchange rate was 1.7733, GBP NZD exchange rate was 1.9004, and GBP CAD exchange rate was 1.7699.

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