Pound Eases Back on Dollar But Outlook Remains Positive


The government’s plans to reduce the restrictions it had placed on social gatherings is also likely to have a positive influence on the pound sterling’s direction.

The pound took a breather against the greenback during London trade on Wednesday, but analysts say that it continues to be buoyed by the government’s thus-far successful vaccination program. The US dollar had lost some ground in early trading in London as a result of slippage on US Treasury instruments, but it has been able to recoup some of those initial declines. The government’s plans to reduce the restrictions it had placed on social gatherings is also likely to have a positive influence on the pound sterling’s direction. That, in turn, has lowered expectations of a possible negative interest environment that some market participants had feared the Bank of England would enact in order to stimulate the economy.

In London trading as of 11:41 am, the GBP/USD was trading at $1.3887, a loss of 0.0382%, sliding away from the session peak of $1.39150. The EUR/GBP was higher at 0.8566 pence, a gain of 0.007%; the pair has ranged from a low of 0.85493 pence to a high of 0.85777 pence in today’s trading day.

Inflation Data in Focus

Some inflation reports have begun to be released for the month of February. In China, the National Bureau of Statistics China reported that consumer and producer prices were higher than expected. The CPI for February, on an annualized basis, was -0.2% against a forecast of -0.4% while on a monthly basis, CPI was 0.6% against a forecast of 0.4%. Producer prices in the same period were recorded at 1.7% on an annualized basis, with analysts calling for a rise to 1.5%. Later today, markets will focus on inflation data out of the US. Analysts are expecting to see the Core CPI stay flat at 1.4% on an annualized basis, but rising to 0.2% on a monthly basis; core CPI strips out food and fuel components.



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