LONDON: The pound was a touch lower against the dollar and flat against the euro on Friday, with investors still generally bullish but watching out for possible downside risks relating to the UK’s COVID-19 vaccine rollout and tensions with the European Union.
Sterling has gained around 1.8% so far this year against the dollar and 4.2% versus the euro. Analysts say the moves in cable are more dollar-driven, while the euro-sterling move is largely due to Britain’s success in rolling out COVID-19 vaccines and relief that a last-minute Brexit trade deal was reached at the end of 2020.
The Bank of England kept its interest rates and 895 billion pound bond-buying programme unchanged, as expected. It said that Britain’s economic recovery was gathering pace but policymakers were split over the prospects for longer-term improvement.
The pound initially slipped after the BoE meeting, but remained on track for a weekly gain against the euro. It was set for a net weekly loss of around 0.4% against the dollar.
At 1202 GMT on Friday, sterling was at $1.3911, down 0.2% on the day. Versus the euro it was little changed, at 85.57 pence per euro.
Ned Rumpeltin, head of European currency strategy at TD Securities, said that sterling was likely to continue strengthening against the euro due to the UK’s relative success in delivering vaccines.
“We would not be surprised to see euro-sterling trend towards the 82, 83 level,” he said.
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