GBP/USD has continued its recovery this week for the third consecutive day reaching 1.3960 this morning, gaining more momentum off the back of yesterdays announcement for The U.S. that Biden’s $1.9 trillion Covid package successfully got passed. Sterling is also comfortably within the 1.16-1.17 range against The Euro, hitting a high of 1.1693 earlier this morning. This is largely due to the vaccine effect on The UK’s economic prospects. The Organisation for Economic Co-operation and Development have stated they expect The UK’s GDP to expand by 5.1% throughout 2021, much better than the initial 4.2% predicted back in December.
The main focus for the Euro today is the ECB meeting at 12:45pm. Speculation suggests The European Central Bank will leave its current policy unchanged, more importantly the forecasts moving forward will play a bigger part for the single currency. Europe are continually coming under pressure of late, with fears of another outbreak of Covid cases hitting the continent as only 9 of the 40 countries analysed recorded fewer cases in the first week of March than what was recorded Mid-February. Spain is also the only country to have a lower case rate compared to the end of September.
The economic outlook for the continent isn’t great either, with The OECD only expecting an uplift in GDP of 0.3% against the initial figures projected in December, with both France & Italy seeing their growth figures downgraded for 2021.
USD started Thursday’s trading session marginally lower after mild data releases eased inflation fears, as well The ECB meeting this afternoon taking the spotlight of the USD. The currency has been rising steadily of late on a combination of the loose fiscal and monetary policy adopted. The latest being the $1.9 trillion package passed through The U.S House yesterday. This package was expected to be the catalyst for a stronger recovery, however the currency took a hit after inflation data for February only rose by 0.1%, showing no improvement from January. The yearly figures also brought disappointment as inflation only rose by 1.3%, slightly lower than the 1.4% rate recorded in January and well below the 2% target.