Sterling has started this week sliding against the euro and US dollar but remains – for now – around 0.5% higher than this time in August against both.
Last week was a fascinating one for data, with UK unemployment falling sharply, yet inflation hitting its highest rate for years. Then retail sales came in on Friday at far below expectations.
Data from the eurozone similarly gave no clear direction, although inflation was pegged back to 3.3%, from 4.1% last month.
In the US on the other hand, retail sales grew by 0.7% instead of contracting by the same amount, as had been forecast. Consumer expectations are also up in the US.
What does it all mean? Economic policymakers must be looking at all the data and, never having needed to lead their country out of a pandemic before, wondering what to make of it all. No wonder that the currency markets are struggling to find direction too.
Underlying all this, new Covid cases are still at around 30,000 per day in the UK. Yet for high street shops, restaurants and travel this weekend the pandemic seemed to be regarded as over. International travel is also being opened up.
Cases in mainland Europe are at a far lower rate, so if matters do take a turn for the worse in the UK and lockdowns have to be reimposed, the shock to the pound could be severe.
Hence, if you are planning a viewing trip abroad, with all of our favourite destinations now on the green list for travel, do talk to your trader on 020 8108 5337 about locking in your rate.
