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Pound (GBP) Rises as UK Growth Rebounds in March

Published: 12 May at 2 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, France, Germany, India,

Pound (GBP)

The Pound (GBP) rose against many of its peers today after the latest UK growth data revealed that the UK had rebound in March, thanks to the Government’s extensive Covid-19 vaccination rollout programme.

UK Chancellor Rishi Sunak celebrated the data, saying:

‘Despite a difficult start to this year, economic growth in March is a promising sign of things to come. As we cautiously reopen the economy, I will continue to take all the steps necessary to support our recovery.’

As a result, GBP has benefited from growing confidence in the nation’s economy, with England still set to further ease lockdown restrictions on 17 May and in June.

Euro (EUR)

The Euro (EUR) is treading water today despite April’s German harmonised index of consumer prices confirming forecasts and rising by 2.1% – a two year high.

Analysts at Bloomberg commented on the figure:

‘While some analysts foresee a new era of higher inflation after the pandemic, fuelled by pent-up demand and a glut of savings boosted by massive fiscal support to households, the European Central Bank predicts any pickup will be temporary.’

Confidence is returning to the Eurozone’s economy, however, as European stocks head higher following yesterday’s sell-off. Germany’s DAX is up by 0.1%, while the French CAC is down by just 0.1%.

The Eurozone’s latest Sentix investor confidence report for May has also buoyed the single currency. Sentix revealed that consumer morale had risen to 21.0 this month.

US Dollar (USD)

The US Dollar (USD) remained subdued today despite prevailing risk-off mood steadily uplifting demand for the safe-haven ‘Greenback’.

In US economic news, today saw the release of the latest consumer price index figure for April, which beat forecasts and rose by 0.9% – its highest level since 2008.

The US Federal Reserve has previously stated that it would allow inflation to rise above targets before it takes any action. But this has had little effect on the US Dollar, which has remained somewhat subdued over the course of this week.

Canadian Dollar (CAD)

The oil-sensitive Canadian Dollar (CAD) has benefited from increasing crude prices, with Brent currently trading around $69.20.

The International Energy Agency commented:

‘The anticipated supply growth through the rest of this year comes nowhere close to matching our forecast for significantly stronger demand beyond the second quarter.’
India’s Covid-19 crisis is however dampening confidence in the outlook for oil demand, limiting confidence in the oil-sensitive ‘Loonie’.

Australian Dollar (AUD)

The Australian Dollar (AUD) suffered today after the Commonwealth Bank of Australia (CBA) revealed that Australia’s credit rating could be lowered from AAA.

As a result, ‘Aussie’ investors are becoming more cautious about the outlook for the Australian economy, which is still struggling to recover from the Covid-19 pandemic.

New Zealand Dollar (NZD)

Risk-off mood has limited the appeal of the risk-sensitive New Zealand Dollar today.

Added to this souring relations between Australia and China has also dampened confidence in the outlook for New Zealand’s economy, which relies heavily on trade with China.

As of Wednesday, 12th May 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1647, GBP USD exchange rate was 1.4062, GBP AUD exchange rate was 1.819, GBP NZD exchange rate was 1.9623, GBP CAD exchange rate was 1.7053, GBP CNY exchange rate was 9.0798, and GBP INR exchange rate was 103.6311.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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