The UK's vaccination programme has been continually posting solid figures, with over 30 million people now vaccinated. The Pound to US Dollar exchange rate has been climbing as a result, sitting around 4.5% stronger than the start of the year. The Bank of England also appears to be cautiously optimistic in its tone regarding the UK economy and monetary policy. However, there remains some uncertainty regarding vaccine supply levels in the coming months—an issue that might impact the Pound's popularity. In the week ahead, UK labour market data will be released, as well as inflation, manufacturing, services, and retail stats. Additionally, Bank of England Governor Andrew Bailey will speak on Tuesday and Thursday, which could create some market movement.
Europe's coronavirus situation seems to be worsening—a slow vaccine rollout, tighter restrictions, and higher infections are all perpetuating the impacts of the pandemic in the area. Last week, comments from the European Central Bank helped to buoy the Euro, which reached highs of around €1.1980 against the US Dollar. However, it's expected that Eurozone growth will show contraction in the first quarter of this year and any other quarters that remain impacted by the tighter coronavirus measures. In the week ahead, German and French manufacturing and services stats will be released, while the EU Economic Summit will also take place on Friday. ECB President Christine Lagarde will also speak on Wednesday and Thursday.
The Federal Reserve opted to keep monetary policy settings on hold last week but upgraded growth expectations for the year to 6.5%. The US vaccination programme looks to be improving, with the potential to exceed Joe Biden's initial pledge. The US and UK's situation looks similar, with both countries flying through vaccinations with the view to return to some semblance of normality as the year continues. In the week ahead, Federal Reserve Chairman Jerome Powell will speak on multiple occasions, as well as other Fed policymakers. Additionally, data pertaining to the US's manufacturing and services sectors will be out for release, as well as growth stats for Q4 of 2020.
AUD and NZD
The Pound to Australian Dollar traded in a 1.16% range during last week's sessions, while the Pound to New Zealand Dollar traded in a range of 1.30%. The Pound fell by 0.20% by the end of the week against the Aussie, while softening by 0.18% against the Kiwi on the back of potential vaccine supply shortages in the UK. Meanwhile, commodity currencies such as the Australian and New Zealand Dollars could be supported if the US Federal Reserve continues to strike a dovish tone. The Aussie and Kiwi both appreciated versus the US Dollar as the Federal Reserve made its announcement, but gave up those gains by the end of the week.
New Zealand Balance of Trade and Credit Card Spending will be out in the week ahead, which could influence the Kiwi. Meanwhile, Markit's Australian Manufacturing and Services stats will be released, which could be moderately influential for the Aussie Dollar.
Quiet data week ahead
The Pound to Canadian Dollar traded in a 1.16% range last week, slipping slightly by 0.20% by the close of the week. It's an incredibly quiet week ahead when it comes to Canadian economic data, with only the Budget Balance and a speech by the Bank of Canada's Toni Gravelle to note. This means the Loonie could be more sensitive to commodity prices, global developments, and other currency movements.