The British pound took some impetus from expectations of the future of tightening the Bank of England policy, in addition to the easing of fears of the new Corona variable, despite its widespread. The sterling did not notice much of the criticism of British Prime Minister Johnson and his government. A leading independent economic think tank says British Prime Minister Boris Johnson remaining in office could cause greater economic repercussions than if he were to leave. Capital Economics sees little prospect of a shift in material policy under a new PM which could allow the economy to continue to recover over the coming months.
Chief UK economist at Capital Economics is looking for two potential flashpoints over the coming days: The first is the release of Sue Gray’s report on what happened and whether the rules were broken. The implications for Johnson of being accused of breaking the law cannot be underestimated. Another hot spot to watch is the resignation of cabinet members, which is usually a source of pressure on the prime minister.
On the other hand, The Euro (EUR) firmed early last week amid a drop in Eurozone unemployment, a weaker US Dollar (USD) and a risk-off market mood.
The single currency then wavered through much of the week. A retreating US Dollar buoyed EUR while a dovish European Central Bank (ECB) and an improving market mood offset the upside.
Finally, EUR lost ground to GBP by the end of the week. The Eurozone reported its first trade deficit since January 2014, while German GDP data confirmed that Europe’s largest economy remains below pre-pandemic levels.