G20: what did the leaders decide?
The G20 summit took place in Bali, Indonesia, on November 2022…
GBP: clearer skies ahead
Information is not investment advice
Virus status
Thanks to the rapid deployment of the vaccines, the virus dynamics in the UK are consistently improving. As the below charts show, the number of infections is dropping as does the mortality rate. At the moment, it’s the primary fundamental factor that lets observers assume the coming of economic recovery in the UK.
Source: https://coronavirus.data.gov.uk/
Labor market
In the meantime, unemployment appears to have passed the peak in December-January – that corresponds to the peak of infections in the same period. The number of employed people grew almost 70,000 in February giving reason to assume that the jobless rate will be less than 5% in that month. In general, companies are reported to take an upward curve as they are hiring more in expectation of the ending lockdown and improved humanitarian and, hence, economic environment.
Inflation
In the meantime, inflation eased to 0.4% in the UK. Analysts say it’s the result of the drop in the prices of clothes and leisure items that saw lower demand recently. However, observers comment that the stockpiles of cash accumulated over lockdowns and lower consumer activity may soon spur the economy as people are expected to spend more. The Bank of England’s target is 2% for the first part of the year. The Chancellor of the Exchequer Rishi Sunak’s policy on continuing furlough payments to the UK citizens may help reach that objective on time.
The pound
In recent months, the GBP gained significantly against the USD and the EUR. That is, despite all the Brexit hurdles and the worst economic crisis in the UK for the last 300 years. Optimism about the British economy suggests further strengthening of the pound beyond its current levels. However, another version is that as the global economy recovers with the USD and the EUR restoring their value, the pound will get back to its pre-virus levels: GBP/USD to the area of 1.30 and EUR/GBP to 0.90. The coming months will confirm – or disprove – if there will be signs of the trends that would correspond to this assumption. In any case, the economy is fundamentally on a clear recovery path in the UK.
Similar
The End of Era: What Might the UK Face Next?
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
Why didn't oil prices calm despite OPEC+ attempts?
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
Popular
Best Instruments to Trade This Week
This week, there are a few high-probability trade ideas I'd like to recommend to you. Trading these setups, be sure to implement a proper risk management approach.
European Currencies Ahead of the Banks' Statements
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
Will the FOMC Surprise the Markets?
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Choose your payment system
