UK Chancellor Sunak planning to inject the UK with a post-lockdown boom

Ross J Burland FXStreet

The UK's economy is under the spotlight considering how far the pound has managed to rally in recent days without pause for a breath.

The bank of England recently dialled back on negative rates and the vaccine roll-out has gone better than expected for which PM Boris Johnson has decided to tentatively ease lockdown restrictions.

Additionally, there haven't been any reported disruptions to UK trade since Brexit and the pent-up demand with prospects of a strong economic recovery have boosted sterling.

In recent news, the UK chancellor Rishi Sunak is planning 'giveaway' budget next week to inject the UK with a post-lockdown boom, according to an article in the Daily Mail.

''The mail can reveal Treasury officials are examining even more dramatic plans for a major stimulus to the economy later this year.''

Market implications

If investors take a leaf out of the US book, then this is promising for the UK shares market but potentially limiting for the prospects for higher highs in the pound.

With that being said, if investors take the view that this will boost the economy and if that outweighs the risks of lower real yields, then the pound could benefit from demand for UK assets.

GBP/USD consolidates below yearly highs, focus is on 1.3980

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold loses the grip; $4,000 comes next on the downside

Gold sets aside two daily advances in a row on Friday, opening the door to a potential test of the key $4,000 mark per troy ounce. The precious metal’s retracement follows a decent improvement in the sentiment surrounding the US Dollar, solid NFP data and higher US Treasury yields across the board.

Democrats win House and Senate in US midterms: Why isn’t all bad news for crypto

The biggest story this week was Tuesday’s US midterm elections, which saw Democrats win control of both the House and the Senate in a clear blue wave. This political shift in the US has triggered sharp price swings across the cryptocurrency market.

Week ahead – Inflation and geopolitics in focus as US political landscape shifts

Post-midterm election euphoria fizzles out as risk aversion prevails. US CPI, PPI and Fedspeak on the radar as Fed hike bets remain supported. Oil retreat pauses on mixed hopes about the ongoing conflicts.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.