IFX Market Report: Friday 21st May 2021

Cable was able to gain some subtle upside in Thursday’s session as retreating US bond yields undermined a weaker US Dollar. The pair was able to gain “some positive traction” yesterday “amid the emergence of some fresh selling around the US Dollar”. Adding insult to injury, an abysmal weekly US Labour report added to the Greenbacks woes. The US Initial Weekly Jobless Claims fell to 444K during the week ended May 15, while the figure was expected at 450K. Not only this, the Philadelphia Federal Reserve Manufacturing Index, which measures the relative level of business conditions amongst manufacturers in the Federal reserve district, dropped by more than forecasted to 31.5 in May, with a previous of 50.2 in April, indicating a devastating drop in the US manufacturing sector.

Sterling on the other hand remains steady, still supported by the upbeat outlook for the UK economic recovery as the gradual easing of lockdown restriction continues. While the new Indian variant of COVID-19 could be a threat to Britain’s “re-opening”, UK Prime Minister Boris Johnson said earlier in the week that there is no conclusive evidence as of yet “to indicate that the Indian variant would force Britain to deviate from its plan to end restrictions fully on June 21”. There is also further downside risk for Sterling as uncertainty still looms over the post-Brexit agreement on Northern Ireland. Until these risks are reduced, it's likely Sterling bulls will refrain from placing any aggressive bets.

GBPUSD opened Thursday trading at 1.4117, and thanks to a declining USD, finished the day off at 1.4155.

GBPEUR in contrast struggled on the day, still unable to regain it’s status in the 1.16’s. The pair opened at 1.1590 and closed at 1.1589.

Similarly to Cable, EURUSD capitalized on a weaker Dollar – climbing beyond the 1.22 mark once again. The pair opened at 1.2180 and closed at 1.2214.

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