LONDON: Sterling rose to a one-month high against the dollar on Thursday and firmed a quarter percent to the euro, benefiting from a general improvement in risk sentiment triggered by soothing reports on the Omicron COVID-19 variant.
A three-dose course of AstraZeneca's COVID-19 vaccine is effective against Omicron, the company said, citing data from an Oxford University study. Its findings match those from rivals Pfizer-BioNTech and Moderna, which say a third shot of their vaccines works against Omicron.
Coming on top of reports that Omicron patients are less likely to need hospitalisation, the news raised hopes that governments may not need to expand activity curbs, allowing economies to recover.
UK businesses posted the weakest quarterly growth since the three months to April when lockdowns were in effect, the Confederation of British Industry (CBI) said.
On the positive side, Britain cut its COVID-19 self-isolation period to seven days from 10 days.
By 0900 GMT, the pound rose 0.2% to the dollar at $1.3380, just off a one-month peak of $1.33875 hit earlier. Against the euro, it firmed to the highest since end-November, rising 0.3% to 84.53 pence.
Societe Generale analysts noted that revisions to third-quarter UK GDP, while disappointing, showed output now was less than 2% below pre-pandemic level.
The real driver of sterling's latest bout of strength is likely "short-covering after another failure to re-test $1.32," a level it approached on Wednesday, the analysts told clients.
More positive Omicron news may be needed to fuel further significant moves, they added.
The pound has risen 1.6% to the dollar since Dec. 15, just before a surprise Bank of England interest rate rise, but remains down 2% on the year.
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