The Pound has weakened against both the Euro and the Dollar as the EU launched legal action over the UK’s supposed violation of post-Brexit trading arrangements with Northern Ireland. Bank of England Governor Bailey suggested the economy could return to pre-pandemic levels at the end of the year but this was largely ignored by the market.
The Euro has weakened against the Dollar but has made gains against the Pound. With Europe’s largest economies suspending the use of the AstraZeneca vaccine, concerns have now turned back to the slow rollout of the vaccine across the continent as well as increasing virus cases in Italy and Germany.
US Empire State manufacturing data came out better than expected at 17.4 compared to 14.6 that was forecast. In addition, investors are now expecting US inflation to see an uptick which helped push US Treasury bond yields higher creating further demand for the Dollar.