Sterling has made further gains this morning following Boris Johnson’s announcement to reopen the UK over coming months.
The roadmap set out last night by the Prime Minister has been well-received by markets, with the cautious approach giving economists optimism that the UK will avoid a fourth lockdown and be on course for a strong economic rebound.
This morning the pound has also received a boost from UK employment figures, which showed wage growth accelerating to 4.7% annually and unemployment dropping by 20,000 last month. However, it’s yet to be seen what will happen in the jobs market when the government ends the current furlough scheme.
The broad weakening of the USD has also benefitted Sterling, as US bonds receive a fresh bid, lowering their yields and pushing the dollar down. Investors have been cautious to favour the dollar ahead of this afternoon’s Federal Reserve Chair Jerome Powell’s speech to Congress, with the expectation that he will look to keep above-target inflation in the medium term and keep borrowing costs low to support growth.
As a result, the Pound has pushed through some key technical levels across the major currencies and appears to continue to have momentum. The GBP/USD has hit the highest levels since April 2018 and has gained around 5-cents in February. The GBP/EUR has continued to rise and now trades at the highest levels since March 2020 and moved up nearly 6-cents since the start of this year.