Daily Market Recap - GBPUSD Riding high at start of the week

The British pound climbed on Monday against a weakening U.S. dollar as traders regained confidence in the British currency as the U.K.'s deconfinement progressed. Meanwhile, the dollar fell to its lowest level against the euro in six weeks.

At around 18:45 GMT, the pound was gaining 1.12% against the dollar at 1.39873 dollars and 0.61% against the single currency at 86.04 pence to the euro, a week after the reopening of most shops in England.

“The pound spilled everything in its path on Monday, taking advantage of a relatively quiet session to climb after the first weekend since the easing of the containment rules,” commented Connor Campbell, an analyst at Spreadex.com.

Non-essential shops and pub and restaurant terraces have been able to open since last Monday.

“The first indicators suggest that the reopening since last Monday marks the beginning of a significant rebound” as British consumers have accumulated significant savings during the lockdown, said Paul Dales, an analyst at Capital Economics.

In addition, while the pound benefited from the weakness of the dollar, it also allowed the euro to rise above the 1.20-dollar threshold. The greenback was thus down 0.52% to 1.2036 dollars for a euro, its lowest in six weeks.

“New week, new lows for the dollar. The greenback has reached its lowest level in a month against its British and Canadian rivals, and its lowest level in six weeks against the euro,” said Joe Manimbo of Western Union.

According to him, the decline of the dollar has accelerated “with the idea that a strengthening U.S. economy will not lead to runaway inflation. As a result, the market strongly supports the view that the Fed will not be forced to raise interest rates anytime soon,” the analyst added.

On the European side, “the single currency was supported by the idea that the acceleration of the vaccination campaign in the European Union would support growth,” said Fawad Razaqzada, an analyst at ThinkMarkets.

(Chart Source: Tradingview 19.04.2021)

But “the European Central Bank is likely to remain cautious and reiterate that support for the economy is still needed on Thursday” at its next monetary policy meeting, Razaqzada warns.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.