1st June - Weekly FX Update

GBP/EUR

Tuesday 9AM 1st June: 1.16000

The Euro started poorly last week as the ECB president dismissed any speculation that the ECB would taper its bond buying programme. It then saw a very short-lived boost as German business climate morale hit a two year high for May. Following on from this, the Pound then headed into the weekend bullish after comments made by Gertjan Vlieghe from the BoE hinted at an increase in interest rates by early 2022, however, some profit taking early this morning meant the Pound has dropped off slightly and is now back testing the 1.16 mark. There are very limited data releases in the coming week and expect the rate to be volatile with speculation regarding interest rates and Covid-19 variants.

GBP/USD

Tuesday 9AM 1st June: 1.41391

GBPUSD has built up some good consolidation last week. After initially getting off to a poor star, the BoE, in particular, Gertjan Vlieghe, hinted at an increase in interest rates by early 2022, which surprised investors and pushed the pound higher. Governor Andrew Bailey is set to speak this week which will give a better indication on the BoE's stance. The UK economy is looking stronger and it is certainly supporting the Pound as unemployment falls and inflation rises. In comparison, the U.S. is beating inflation estimates, which hit 3.1% in April, creating some fear and pushing the Dollar down. FED governors are set to speak today, but GBPUSD has room to extend it's break upwards.