It was an up and down week for the British pound, rising higher on better-than-expected U.K. unemployment data, followed by global risk sentiment taking it down later in the week.
United Kingdom Headlines and Economic data
“Schools in England will reopen on March 8, while recreation in outdoor public places like parks will also be allowed between two people.”
By June 21, the government hopes to abolish all legal limits on mixing and to reopen the last sectors to remain closed, such as nightclubs.
“The Confederation of British Industry’s gauge of retail sales stood at -45, up only slightly from January’s eight-month low of -50. The measure points to falling sales and is below the consensus forecast of -38 in a Reuters poll of economists.”
“The unemployment rate rose to 5.1% of the workforce in the three months to December, according to the latest data available from the Office for National Statistics (ONS). It marks a five year high for unemployment. December’s figure was up from 5% a month earlier.”
Despite the tick higher in the unemployment rate, we did see a net reduction in claims (-20K) and the average earnings index rise by 4.7% (vs. 4.1% exp). Overall, it was a positive update and likely why saw bullishness in Sterling following the release.
In a letter to the European Commission on Tuesday, Cabinet Office Minister Michael Gove said that he expects that the EU “should be able to satisfy its internal requirements” by the end of April and the U.K. “would therefore not be asked to further extend the period of provisional application.”
“On the one hand demand – the overall level of economic activity – is still materially, materially below where we were before the pandemic. And in the forecast it’s a year hence only that we get back to those levels.
“Following advice from the Joint Biosecurity Centre and in the light of the most recent data, the four UK Chief Medical Officers and NHS England National Medical Director agree that the UK alert level should move from level 5 to level 4 in all four nations,” Britain’s health ministry said in a statement.
“US 10-year Treasury yield jumps above 1.4% for first time since start of Covid crisis”
Rapidly rising bond yields was the catalyst for an accelerated turn in broad risk sentiment on Thursday, taking Sterling down with it.