31 May 2021
At the start of the week, the British Pound is close to secure a monthly gain against the Euro and Dollar, as May comes to an end. The GBP/EUR rate stands at 1.1626 whilst the GBP/USD trades at 1.4173. The Pound-to-Euro exchange rate had dropped 2.22% in April and has already went up by 1.25% this month.
Strategist Valentin Marinov pointed out the reason for the Sterling’s advancement: “The GBP remains close to recent highs of late and more recently one of the big supports for the pound have been the surprisingly hawkish comments by the MPC member and hitherto arch-dove Gertjan Vlieghe.”
Hopes over the Pound’s performance were given after BoE Monetary Policy Committee (MPC) member Gertjan Vlieghe's speech to the University of Bath on Thursday May 27. Additionally, Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING Bank noted, "GBP has performed well ... on the back of comments by BoE dove, Vlieghe. He laid out three scenarios for the path of the UK economy and the BoE's response - yet the market only reacted to the hawkish scenario.”
The Pound-to-Dollar exchange rate trades dropped from near recent multi-year highs at the end of last week, before the U.S. published important inflation data.
The Federal Reserve (Fed) prefers the PCE price index as measure of inflation. "The budget would boost federal spending by 5% above the 2021 projected level, and spending will keep rising to reach USD8.2 trillion by end-2031,” strategist Michael Every said.