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GBP/USD hits highest level since 2018

GBP/USD hits highest level since 2018

The Pound to US Dollar continued to trade sideways last week but managed to attain its strongest level since April 2018, albeit briefly. GBP/USD interbank highs of 1.4248 were recorded with lows of 1.4083. The Pound to Euro exchange rate also had a flat week, closing just 0.9% higher. In Covid news, the UK's exit from restrictions is in doubt with the new Indian variant still spreading. The vaccine programme will open to those under 30 this week to try and regain some control. In economic data, house price stats showed values jumped by 10.9% in the year to May on account of tax breaks introduced during the pandemic. In the week ahead, growth and manufacturing data will be released, and Bank of England Chief Economist Andy Haldane is also expected to speak on Tuesday and Thursday. Additionally this week, the G7 event will take place in Carbis Bay in Cornwall, where world leaders will meet and discuss present issues. The event will kick off on Friday afternoon, and this year's main topic is 'A stronger global health system that can protect us all from future pandemics'.

Attempting recovery

Disappointing US data allowed the Euro the opportunity to bounce back above the 1.2150 interbank level against the US Dollar on Friday, after a tricky week for the single currency. In the week ahead, German industrial data will be released, as well as Eurozone sentiment stats. In addition, the European Central Bank will provide its next monetary policy announcement on Thursday, including the interest rate decision. Markets are hoping some clarity will prevail surrounding interest rates. Still, ECB President Christine Lagarde will likely use restraint in any comments, unwilling to rock the boat with her words as the currency bloc attempts to recover from the pandemic.

US jobs data disappoints 

Friday saw the release of weak US labour market data, and while the Dollar Index initially climbed by 0.63% after the disappointing release, the weekly gain sat at only 0.09%. High consumer demand and a shortage of workers and materials as unlocking continues have put businesses under a lot of pressure. There's been speculation that the Federal Reserve could begin to taper its monetary policy, and this week's inflation data will be closely watched with forecasts suggesting an increase; however, a fall could cause anticipation to be reined in. On the flip side, former Chief of the US central bank and current Treasury Secretary Janet Yellen stated that higher interest rates would be good for the Fed over the weekend, which propelled the Dollar higher. In the week ahead, US inflation, labour market, and consumer confidence data will all be released. 

Paring gains 

The Pound to New Zealand Dollar climbed by as much as 1.5% last week but pared gains on Friday, ending the week just 0.3% higher. The Sterling to Aussie exchange rate slipped by around 0.3%. This week, the Australian Westpac Consumer Confidence Index will be released, which evaluates sentiment from households regarding their financial situation from the last year as well as the year ahead. A score over 100 indicates optimism, and the May ecostat printed at 113.1. Higher levels of optimism can result in more spending and contribute towards economic growth. Additionally, inflation data and building permits stats will also be revealed. Meanwhile, in New Zealand, moderately influential manufacturing and card spending stats will print. 

BoC events ahead

The Pound to Canadian Dollar dipped around 0.6% lower at the start of the week before recovering close to where it opened. In the week ahead, trade balance, imports, and exports data will all be published. Meanwhile, the Bank of Canada will also announce its latest interest rate decision, which is expected to remain at 0.25%. Later in the week, BoC Deputy Bank Governor Timothy Lane will speak.