Last week the US Dollar made significant gains across the board as the market started to question the duration of the ongoing Federal Reserve despite continued echoing from the central bank, pledging their support. The rationale for the change in sentiment from the market was the improvement in data which saw consumer confidence, labour, and spending data improve. If this trend continues then inflation is likely to improve and subsequently the potential for a rate cut but also the reduction of support mechanisms.

In the meantime, the Sterling fell from its circa 3-year highs against the US Dollar and its 1 year high against the Euro. The Sterling has been boosted by the effectiveness of the vaccine rollout and the optimistic roadmap for the reopening of the UK economy. According to data compiled by Statista up to 25/02/21, the UK had vaccinated 28.57 in 100 whilst in comparison to Germany and France who are both less than 7 in 100. However, comments from BoE members were more cautious and put some question marks around underlying fundamentals. Bank of England Deputy Governor Broadbent stated that risks for employment was in both directions but that there was a clear risk that the rate will rise significantly once job-support schemes come to an end. In addition, he stated that the central bank is continuing to debate the effectiveness of negative interest; therefore, not removing the issue. In the meantime, MPC member Haskel stated that risks to activity are very much on the downside, especially relating to February forecasts.

Looking to the week ahead, the key events will be the UK annual budget on Wednesday and the US headline job figure on Friday. Last week PM Johnson outlined his roadmap for reopening the economy which was slightly more cautious than many were forecasting, especially given his historic rhetoric. Chancellor Rishi Sunak is due to release the UK annual budget on Wednesday. The market will be keen to articulate how the government will support the economy and the roadmap of its withdrawal as well. In the meantime, question marks have started to be raised about the economy, particularly surrounding the robustness of it. The market will pay particular attention to Friday’s all important job numbers and watch FOMC Chair Powell’s comments given market activity last week.  


  • UK/EZ/US Manufacturing PMI
  • UK lending figures
  • ECB President Lagarde Speaks

Manufacturing data is released from the UK, Eurozone and the US and is expected to confirm that the sector has been expanding at a healthy pace. In the meantime, consumer lending figures are set for release from the UK. Lending figures tend to reflect confidence from consumers and institutions to both lend and borrow. Based on economic conditions, the headline figure is expected to drop significantly; this may be due to the previous months activity related to the stamp duty holiday. ECB President Lagarde’s is speaking at a virtual conference hosted by the German Association for Small and Medium-sized Businesses. The market will look to see if Lagarde drops any hints on future policy. Inflation is expected to remain tepid but will be monitored to see if there is any increase, and what that increase may look like.


  • UK Nationwide House Price Index
  • German Unemployment
  • EZ inflation

UK housing prices will be watched for signs of economic confidence, but the headline figure is expected to decrease as viewings are likely to have decreased as a result of lockdown. In the meantime, amidst the issues with the vaccine rollout from the Eurozone, economic metrics will be closely watched particularly the unemployment figures from Spain and Germany which are set to be released. The annualised inflation rate is expected to slide from 1.4% to 1.1%


  • UK Annual Budget Release
  • UK/EZ/US PMI services
  • US ADP employment
  • US Beige Book

The headline event for the UK will be the Annual Budget Release. Chancellor Rishi Sunak has said he “is preparing a Budget that provides support for people” as COVID lockdown rules are eased. Sunak said he would provide help during that period but added that he wanted to “level with people” about the “shock to the economy” caused by COVID. The furlough scheme – which supports around 4.7 million people – is due to finish at the end of April and it is expected that this could be extended. The US ADP employment report is set for release ahead of Friday’s US Government’s labour data. Historically, the figure is reviewed and articulated but rarely causes volatility as the alignment with Friday’s can often be substantially misaligned. However, it is still viewed as a potential signpost for the direction of job growth or contraction. In the meantime, the beige book is set for release. This reviews anecdotal evidence supplied by the 12 Federal Reserve banks relating to local economic conditions in their respective districts.


  • UK Construction PMI
  • EZ unemployment
  • US jobless claims
  • Fed Chair Powell Speaks

The UK construction data will provide some insight into the economy given restrictions surrounding the construction sector are lighter as the work from home rules do not apply. It is expected that the sector will return to expansion following last month’s contractionary reading. The Eurozone’s unemployment numbers are due for release and are expected to remain high at 8.3%. The weekly jobless claims will provide another indication of the state of the labour market ahead of the Friday’s all important job data report. In the meantime, FOMC Chair Powell is due to speak about the US economy at an online event hosted by the Wall Street Journal. The market will pay particular focus on the Q&A session for clues on future policy.


  • US monthly jobs report

The all-important labour data is set for release which will be used to provide the market with an indication of the direction of the US economy is taking. There continues to be big changes in the US with the changing of the guard at the White House, COVID restrictions and future governance. In the meantime, the labour data is expected to display a weakening picture. Job creation is expected to slide as well as average earnings whilst the unemployment rate is set to rise.


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