The pound has strengthened further against the euro this morning, supported by positive data and increasing optimism that the UK will fully reopen on June 21. After weakening against the dollar midweek, sterling has since regained almost all of its strength.
CBI industrial trend orders data revealed that factory output grew at the fastest rate since the end of 2018. Retail sales also surged 9.2% in April, double what markets had predicted, suggesting that consumers had both pent up funds and a pent up desire to shop.
Markets remain sensitive to potential new variants of Covid-19 which could affect further economic recovery. The timing of the Bank of England raising interest rates could also affect the longevity of sterling’s strength.
Sterling’s outlook for next week could be set by Markit PMIs which will be released later this morning. These should give an additional indication of how well the UK economy is recovering.
