Poor jobs data and inflation worries weigh on US dollar as Bitcoin plummets after Elon Musk's tweets

Mon 17 May 2021
Posted by: William Barns-Graham


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Positive economic data for the UK sustained the recent strengthening in value for the pound last week, which has remained resilient in the face of new concerns over the spread of the Indian variant of Covid-19 in the country.

The US dollar continues to be weighed down by disappointing jobs data and fears over inflation, while it’s been another volatile week for bitcoin.

Strong UK data

Wednesday morning’s better-than-expected GDP figures for the UK showed that the economy proved resilient through the second wave of the coronavirus pandemic, growing strongly in March and contracting only 1.5% in the first quarter of 2021.

The official figures suggested a brighter outlook for the economy over the summer after the recovery from the impact of the pandemic accelerated over the spring.

Sterling benefits

The pound opened last week valued at US$1.41 and €1.156, with the feeling that investors had already priced in the country’s political stability and optimism over its Covid-19 recovery.

However, the strong GDP data boosted values another notch, rising to US$1.417 and €1.167 at its peak last week.

Concerns over the Indian strain of the Covid-19 virus have done little to undermine this rise in value, particularly as the government went ahead with plans to lift restrictions on indoors social gatherings today (17 May).

Dollar struggles

Despite predictions of almost a million new US jobs being created in April, Department of Labor figures recorded only 266,000.

Fears also rise over inflation in the US, with fresh new Producer Price Index (PPI) data on Thursday showing a year-on-year rise of 4.2% against an expectation of 3.6%.  

For the moment, the Federal Reserve (Fed) continues to call the rise in inflation “transitory” as the economy reopens.

The markets think differently and see the possibility of interest rate rises coming sooner than initially expected.

Stocks fell and bond yields rose, as the dollar dropped to open this week at £0.71 and €0.82 in value – down from £0.72 and €0.83 at the start of the month.

Bitcoin volatility

It was another extraordinary week for Bitcoin, with the cryptocurrency continuing to endure remarkable volatility following tweets from South African entrepreneur Elon Musk questioning its energy usage.

According to This is Money, its value has fallen 7.6% in value over the last 24 hours as of this afternoon (17 May).

Week ahead  

Inflation data is to be revealed in the UK and Europe on Wednesday, with UK retail sales numbers to be published on Friday.

Monday (17 May)

  • EU Consumer Price Index (CPI)


  • Japanese GDP
  • Eurozone GDP
  • UK unemployment figures


  • UK Consumer price index (CPI)
  • UK PPI
  • Eurozone CPI
  • Canada CPI


  • Australian unemployment figures


  • UK retail sales data
  • Eurozone Purchasing Managers’ Index (PMI)
  • German PMI
  • US PMI