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Things are finally starting to pick up in the UK. Strong PMI data released last week, improvements in the job market and a boost in spending have created a rosy outlook for the economy. The country is now just two months away from a full re-opening and with many businesses yet to return to operation, the idea is that more growth is just around the corner. The EY Item Club have recently upgraded their forecasts for the UK, taking 2021 growth to 6.8% from 5.0% previously, the fastest rate of growth since the Second World War.

Strong retail sales data published on Friday came in at 5.4% from 2.2% in the previous month, indicating an uplift in consumer demand for non-essential items. Such a fast turnaround has put many on edge, as further fears of inflation creep into markets. Andy Haldane Chief Economist at the Bank of England has likened the UK’s inflation position to a tiger ready to strike at any point, raising the belief that interest rates could be increased sooner than expected. With the UK sitting on an estimated £180bn savings stockpile, the re-opening of remaining businesses over the coming months could give rise to another bounce in spending and with it a jump in inflation.

Bottom line: Spending looks likely to return although the rate at which it occurs is open to debate. Google mobility data has shown that trips to retail and hospitality venues have jumped just 24% away from levels recorded in January 2020. Similarly, pubs and restaurants recovered to 42% of pre-pandemic levels, even with just outside seating and many of these businesses not yet open. UK credit and debit card spending has also climbed since April 12th, reaching 91% of levels seen in February 2020, with clothes and non-essentials leading the rise. As the rest of businesses re-open in May and June, the question is whether these levels will recover and if we’ll see a flattening of the spike in credit and debit card spending. This next phase of re-opening could help hospitality return to pre-pandemic levels or there could be a pull back after the explosive rise in spending. A marginal pull back could be expected, as consumers spending powers begin to wane in the coming months. Only time will tell.  


The week ahead


The Pound closed last week lower against most of its peers, after rallying earlier in the week. It peaked at around 1.40 against the US Dollar and 1.1640 against the Euro. This week starts in a similar fashion, Sterling opened higher on a trade-weighted basis, aided by strong economic data at the tail-end of last week, namely retail sales and PMI readings. Further bolstered by the next age-group being invited to their first vaccination this week. The data calendar is lighter this week so broader market sentiment could drive Sterling the most over the coming days, with Wednesday’s Fed meeting being this week’s key event.

  • On Tuesday, CBI Reported Sales for April is expected to post its first positive reading since September 2020, reflecting a bigger high street footfall in the latest stage of easing lockdown
  • Wednesday’s Nationwide House Price index is expected to read 0.5% growth in April vs. -0.2% in March



The Euro continues to drift higher, posting its fourth weekly gain on its trade-weighted basis last week. The Eurozone economic outlook is improving as vaccinations continue to gather pace and the re-opening of economies is being optimistically planned across the continent over the coming weeks and months. After last week’s strong European PMIs, the market will be looking for continued strong data for another push higher for the Euro against the US Dollar. However, the mid-week Federal Reserve meeting could provide a headwind for the Euro. ECB President Christine Lagarde will also be speaking on Wednesday afternoon.

  • Monday’s German IFO Business Climate survey missed expectations, coming in at 96.8 vs. a forecasted 97.8. However, it is still an improvement from last month’s figure and continues to trend higher.
  • Wednesday’s German GfK Consumer Confidence survey for May is expected to read -4.2, up from -6.2 last month.
  • Thursday’s preliminary April CPI reading for Germany is expected to read 0.5%, unchanged from last month’s 0.5%, and an annualised 1.9% reading is also forecast.
  • On Friday, Eurozone CPI for April is expected to read 0.5%, down from 0.9% previously.



The US Dollar posted its third consecutive week of losses on a trade-weighted basis last week, as labour market data and PMI data beat expectations and improved from previous readings. Wednesday’s Federal Reserve meeting will be this week’s highlight, although no new policy stance is expected to come from it despite the recent strong economic data. Analysts will be looking for clues on when monetary policy may begin to tighten again, but these comments may not come until the second half of the year. Furthermore, President Biden could announce his latest $1 trillion economic package this week, including several tax increases in income and capital gains for America’s wealthiest households.

  • Monday’s Durable Goods Orders is expected to show 2.5% growth in March, up from February’s -1.2% reading.
  • On Tuesday, CB Consumer Confidence for April is expected to read 112.0 compared to last month’s 109.7
  • Wednesday’s Wholesale Inventories are forecasted 0.5% for March, building on February’s 0.6% growth.
  • Thursday’s Initial Jobless Claims are expected to read 550k, slightly higher than last week’s 547k, while Continuing Claims is expected to fall to 3590k. Annualised GDP is expected to show 6.9% growth based on Q1 2021.
  • On Friday, Personal Spending in March is forecasted 4.2% growth, while Personal Income is forecasted 20% growth for the same period.
  • Also on Friday, MNI Chicago PMI for April is expected to come in at 64.2, lower than March’s 66.3. The University of Michigan Sentiment Survey for April is expected to read 87.5, up from 86.5 previously.


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