Citi venter en styrkelse af det britiske pund på grund af den begyndende genåbning. UK og USA, der begge har håndteret distributionen af corona-vaccinerne bedre end EU-landene, har dermed fået et økonomisk forspring.
Reopening GBP – Gyms, Blow-dries, Pints
Markets take on the week following an extended break, skewed towards a risk on sentiment. Countries demonstrating strong vaccine distribution lead the way, with record US stock levels, and a supported GBP1.
Positive economic normalisation and strong data may point towards policy action, particularly monitored in the US.
US Dollar (USD)
As mentioned above, the US vaccine roll out paints a positive picture for the economy, as President Biden promotes that 90% of adults will be eligible for a vaccine in the next 2 weeks. Combined with the supportive stimulus, notably the recent addition of 1.9 trillion Dollars, indicates economic normalisation is achievable2.
The USD has faired well in quarter one due to the Covid response, and this has been highlighted by notable key data; March Non Farm Payrolls, Unemployment, and US ISM (purchasing managers Index). As the differing speeds of economic rebound converge, this may very well see demands for the USD unwind in search of alternative placements of cash3
British Pound Sterling (GBP)
The UK starts on a positive note, as the lockdown re-opening remains on schedule. When drawing a comparison to Europe on this front, the Great British Pound (GBP) is poised well for a stronger positioning, with the view that lagged investment into the UK asset market may support further growth as the year progresses3.
Having opened strong this week, particularly vs USD topping above 1.39, the GBP has since seen some selling action at the time of writing, dropping close to a cent, with similar price action on EUR/GBP, with a 0.53% move in favour of the Euro4.
Euro (EUR)
The bearish sentiment for the Euro (EUR) remains, supported through the widening US-EU yield spreads, and a rising concern around a third wave of Covid and the repercussions of increasing lockdowns5. Given the recent revision of EUR/USD forecasts by Citi downward, the outlook for downside potential for the Euro in the short term weighs heavy.
We would note, that with increasing vaccination numbers through time, this may unwind some of the downside potential throughout the year. The below chart highlights the increasing hospitalisation rate in comparison to the UK and US.
