The pound against the dollar continued to decline from yesterday’s two-week high on Tuesday – to 1.37. Having emptied its reservoir amid the UK vaccination campaign and announced that the economy’s roadmap to emerging from isolation would continue as planned, the UK currency hit buffers. He was faced with growing fears about a vaccine rollout after it was confirmed that all adults under 30 in the UK would be offered an alternative to the AstraZeneca vaccine – a course of action that could stall the accelerated program.
Lack of economic data in the UK has also hampered his progress. The first release in nearly a week made headlines yesterday, with the UK’s IHS Markit / CIPS Composite Purchasing Managers Index (PMI) – a measure of the UK manufacturing and services sector – surging to 56.4 from 49.6 in February. Although this was the first expansion – over 50 – in three months, the final reading was lower than the preliminary estimate of 56.6. The rise in new orders and the rapid creation of new jobs boosted business confidence in March.
This optimism was supported by higher forecasts of the International Monetary Fund (IMF) for UK economic growth. The IMF said yesterday that it expects the UK economy to grow 5.3% in 2021 and 5.1% in 2022 – upward revisions of 0.8% and 0.1%, respectively, from January.
The Federal Reserve has a cautious outlook
The $ 1.9 trillion stimulus package proposed by President Biden will stimulate the U.S. economy and fuel rapid global growth this year, according to the IMF after its last member meeting this week. According to the 190-country organization, the US economy will surpass its pre-pandemic size and grow 6.4% this year, up 1.3% from the IMF’s forecast for January. The rebound is expected to help the global economy grow 6% in 2021 – an increase of 0.5%.
Yesterday the Federal Open Markets Committee published the minutes of its meeting on March 16-17. Central bank officials have indicated that the simplified policy will remain in place until it leads to increased employment and inflation – and will not be adjusted solely on the basis of projections. The outcome document states that expectations that the economy will benefit substantially must be matched by real progress before ultralight policy can be adjusted.
The Fed’s cautious outlook triggered a drop in Treasury yields after the protocols offered no new catalysts to guide the market. Despite the pressure on the US currency, the pressure on the pound from the latest UK vaccination developments was stronger yesterday.
Today’s Markit UK construction PMI for March is expected to expand further. The Royal Institute of Chartered Surveyors’ house price balance is expected to rise 2% in March.
Today, employment data is at the top of the US agenda, and the US Department of Labor has released two key figures: the number of applications for continued applications for unemployment benefits and the number of applications for unemployment benefits.
You can contact you using the form below to discuss these factors in more detail before leaving the US to see how this might affect your upcoming currency exchange.