Sterling breaches key psychological levels whilst market awaits PM Johnson’s roadmap and Powell’s semiannual testimony
Last week, the Sterling made multi-month highs against both the single currency and the US dollar as optimism surrounding the UK’s emergence from lockdown restrictions grew. Prime Minister Johnson will be laying out his roadmap for the loosening of restrictions on Monday evening. In addition, helping to push Sterling higher was the increase in risk appetite. Whilst the optimism has boosted Sterling the UK retail sales figures will highlight the fragility of the economy. Retail sales sank 8.2% in January from the month before, the fastest rate of decline since last April. "The latest national lockdown led to a sharp monthly fall in January's retail sales, with April 2020 the only month on record to see a bigger slump," said the ONS' deputy national statistician for economic statistics, Jonathan Athow. Retailers will be waiting to decipher Prime Minister Johnson’s roadmap to articulate when the high street can reopen and under what conditions. Concerns in Europe remain regarding the rollout of the vaccination and the ongoing mutations; however, this was not necessarily reflected in the economic data released. The German ZEW economic sentiment index strengthened to a 5-month high and was above consensus forecasts whilst the wider Eurozone index strengthened to 69.6 from 58.3 previously. This was coupled with the flash reading of the IHS Markit Eurozone composite purchasing managers index which rose to a two-month high, albeit still slightly contracting. It is worth noting that the manufacturing PMI rose to a 36-month high. In the meantime, the US Dollar