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Looking ahead to recovery

Today’s news headlines:

‘BoE expects vaccine-fuelled economic recovery in second half of 2021’. Yesterday, the Bank of England said it would force commercial banks to prepare for the possibility of negative rates, but also that they expect a rapid vaccine-fuelled UK economic recovery in the second half of 2021. The central bank stressed that they didn’t think negative rates were necessary and they do not intend to use the policy tool. This led to a jump in the value of the Pound and a rise in UK gilt yields. The BoE cut short term forecasts as a result of the recent lockdown but is more optimistic about the outlook for later in the year. (Financial Times)

‘German factory orders slide as virus forces curbs on activity’. Orders fell for the first time in eight months after the spread of the coronavirus forced the Euro-area’s biggest economy and most of its trading partners into lockdowns. The manufacturing sector has performed better than services in recent months, as both external demand and global supply chains appear less affected than during the first wave of infections in 2020. The German government cut growth forecasts from 4.4% to 3.0% for this year, with the slow and chaotic start to the vaccination process threatening to compound the challenge ahead. (Bloomberg)

Today's events, rates, and data 

  • Sterling gained around 0.9% on the US Dollar and around 1.1% on the Euro–taking the Pound above 1.14 for the first time since May 2020–after hawkish comments from the Bank of England yesterday. Asian stocks pushed higher after a day of record highs on Wall Street following signs of improvements in the US Labour market.

Today's events

German Factory Orders: -1.9% vs 2.7% previously
BoE Gov Bailey Speaks: 12.15pm & 1.30pm
Canada Employment Change: 1.30pm
Canada Unemployment Rate: 1.30pm
US Non-Farm Employment Change: 1.30pm
US Average Hourly Earnings: 1.30pm
US Unemployment Rate: 1.30pm

Interbank rates

GBP/USD: 1.3685
GBP/EUR: 1.1435
EUR/USD: 1.1970
USD/CAD: 1.2808