Spreadex Market Update

May 17th reopening plans lifts GBP/USD back above $1,40, Dow chasing fresh high



Lacking the hutzpah shown at the end of last week, the European indices were sluggish at the start of Monday. The same can’t be said, however, for sterling.

Reports that the UK government is pushing ahead with its lockdown-easing plan – regardless of concerns over the Indian covid-19 variants currently circulating (and, in some areas, surging) – gave the pound a shot in the arm.

From May 17th up to 6 people, or 2 households, will be able to meet indoors, while cinemas, restaurants, pubs and the like will be able to have patrons mix inside.

This appeared to counter any concerns the currency may have had over the SNP’s renewed push for a referendum on Scottish independence and sent the pound up 0.5% against the dollar and 0.7% against the euro.

Cable is now trading above $1.4066 for the first time since February 25th, while against the euro it has just about recovered the sharp losses it suffered last week, lifting back to €1.158.

This did mean the FTSE struggled to gain much momentum itself after the bell, despite another strong showing from its copper and iron ore-lifted miners. Instead, the UK index added just 0.1%, though that was enough to keep it in the ballpark of a post-pandemic high.

Despite the euro’s losses the Eurozone indices weren’t any more enthusiastic than the FTSE. The DAX was unchanged, a smidge under 15,400, with the CAC a bit better, rising 0.3% to 6,370.

After closing at a record high on Friday – the disappointing nonfarm jobs report likely means the Fed will hold off a bit longer before discussing tapering its current stimulus – the Dow Jones is set to go again this afternoon.

The futures are pointing to a 0.3%, or 90-point, increase for the US index, enough to put it above 34,860 for the first time. It is well within reason that the Dow could find itself at the dizzy heights of 35,000 before too long.

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