GBP Special: Pushing higher

For clients that have an interest in GBP, and specifically GBP vs USD… we are at multi-year highs – a great time to take advantage and sell GBP to buy USD … Referring to Nick Crawley’s FX briefing earlier today:

 The latest UK jobs data release showed employment picking up and the unemployment rate falling, beating market expectations. According to the Office for National Statistics (ONS), the jobs market is showing some early signs of recovery, with the number of payroll employees increasing for the fifth consecutive month, although the number ‘remains 772,000 below pre-coronavirus pandemic levels’.

 Ahead this week, the latest inflation report on Wednesday with the Markit PMIs (May) rounding off the week on Friday. GBP/EUR has not risen to the same degree, sitting just above 1.1600 in the middle of recent ranges.

 A combination of GBP strength, driven by stronger data, the next stage of the re-opening of the UK economy and the success of the UK vaccination program, and a weak USD have pushed GBP/USD ever higher (currently just under 1.4200).

 We are now pushing a fresh 3-year high around 40 pips above here. Consensus suggests that there is little in the way to prevent GBP/USD from hitting this target at the moment with the latest data showing US dollar short positions increasing, while GBP long positions grew.

 Individuals and businesses should be aware of the US Central Bank  minutes, released on Wednesday, where the Fed’s thoughts on inflation will be closely watched. Any hawkish hint by the Fed may cap further GBP/USD up-moves.