AGL 5.60 Decreased By ▼ -0.18 (-3.11%)
ANL 8.90 Increased By ▲ 0.02 (0.23%)
AVN 76.85 Decreased By ▼ -2.07 (-2.62%)
BOP 5.26 Decreased By ▼ -0.02 (-0.38%)
CNERGY 4.63 Decreased By ▼ -0.07 (-1.49%)
EFERT 81.27 Decreased By ▼ -0.33 (-0.4%)
EPCL 50.08 Decreased By ▼ -0.83 (-1.63%)
FCCL 13.16 Decreased By ▼ -0.22 (-1.64%)
FFL 5.69 Decreased By ▼ -0.03 (-0.52%)
FLYNG 7.07 Decreased By ▼ -0.08 (-1.12%)
FNEL 4.79 Decreased By ▼ -0.03 (-0.62%)
GGGL 8.80 Decreased By ▼ -0.10 (-1.12%)
GGL 14.55 Decreased By ▼ -1.33 (-8.38%)
HUMNL 5.69 Decreased By ▼ -0.08 (-1.39%)
KEL 2.63 Decreased By ▼ -0.03 (-1.13%)
LOTCHEM 28.60 Decreased By ▼ -0.45 (-1.55%)
MLCF 24.49 Decreased By ▼ -0.61 (-2.43%)
OGDC 72.43 Decreased By ▼ -0.02 (-0.03%)
PAEL 15.36 Increased By ▲ 0.01 (0.07%)
PIBTL 5.00 Decreased By ▼ -0.05 (-0.99%)
PRL 16.10 Decreased By ▼ -0.19 (-1.17%)
SILK 1.08 Decreased By ▼ -0.01 (-0.92%)
TELE 9.14 Decreased By ▼ -0.23 (-2.45%)
TPL 7.23 Decreased By ▼ -0.10 (-1.36%)
TPLP 18.61 Decreased By ▼ -0.34 (-1.79%)
TREET 21.68 Decreased By ▼ -0.32 (-1.45%)
TRG 136.71 Decreased By ▼ -4.44 (-3.15%)
UNITY 16.88 Decreased By ▼ -0.14 (-0.82%)
WAVES 9.86 Decreased By ▼ -0.04 (-0.4%)
WTL 1.41 No Change ▼ 0.00 (0%)
BR100 4,225 Decreased By -29.6 (-0.7%)
BR30 15,518 Decreased By -214.7 (-1.36%)
KSE100 42,150 Decreased By -243.4 (-0.57%)
KSE30 15,588 Decreased By -75.7 (-0.48%)
Markets

Vaccine hopes boost British pound

  • "A stronger pound is another headwind for UK exporters and provides some small relief for households," noted Paul Dales of Capital Economics.
Published February 23, 2021
Follow us

LONDON: The British pound continued a frantic two-month rise against the euro and the dollar, reaching new highs this week in a sign of traders' enthusiasm for the country's vaccination roll-out.

Just before Christmas, investors feared the country would leave the European single market without a post-Brexit trade agreement.

At the same time, a deadly second wave and new, more transmissible coronavirus variants pushed infection rates up and saw the death toll soar.

It currently stands at more than 120,000 -- one of the worst in the world.

But since December, the pound has gained more than five percent against the euro and US dollar, making it a top performer among major currencies.

The jump is due to the number of people vaccinated: according to the government, one adult in three has already received a first dose, representing more than 17.5 million people.

Another reason for optimism is Prime Minister Boris Johnson's publication Monday of a "cautious but irreversible" roadmap to ease lockdown restrictions by July.

"After a year in which the government's reputation was soured by a string of policy U-turns, the UK has made good decisions regarding vaccines," Jane Foley, head of FX strategy at Rabobank, told AFP.

"The vaccine rollout has improved the economic outlook in the UK relative to elsewhere, especially in the EU," Capital Economics added in a note.

Positive rate

"Markets are still adjusting to the fact that the Bank of England is unlikely to implement negative rates for now," added analysts at Swiss bank UBS.

Like other central banks, the Bank of England adopted a record low interest rate of just 0.1 percent to cushion the economic impact of the pandemic.

But traders were mainly worried it would adopt a negative rate like the European Central Bank or the Bank of Japan.

At its last monetary policy meeting, the bank took that option off the table until August, and governor Andrew Bailey said it might not be implemented then either.

As a result, forex traders began to bid up the pound against the dollar and the euro.

Unlike Europe's single currency, whose strength has weighed on exports, the pound is still at relatively low levels.

While it is just above $1.40 at a near three-year high, the British currency is still six percent below levels seen before the June 2016 Brexit referendum, and 12 percent down against the euro.

"A stronger pound is another headwind for UK exporters and provides some small relief for households," noted Paul Dales of Capital Economics.

"But it's not going to make a big difference to the economy."

Foley warned that "there are speed bumps ahead".

The effectiveness of vaccines against coronavirus variants and the strength of the UK recovery will determine if the pound remains at its current levels or not, she forecast.

And another risk looms on May 6 when elections for the devolved parliament in Scotland could give fresh impetus to the pro-independence movement, she added.

Comments

Comments are closed.

Vaccine hopes boost British pound

Imran Khan seeks power even if it undermines country's foundations: PM Shehbaz

Pakistan 'verifying reports' over IS-K claiming attack on Kabul embassy

CM Punjab Parvez Elahi says 'Gen Bajwa showed us way towards PTI'

Fawad says PTI ‘preparing for elections’ as Imran withdraws offer for talks

Tweets case: Quetta court approves Azam Swati’s five-day physical remand

Russia will not export oil subject to Western price cap, says deputy PM

PTI in front seat in second phase of AJK local govt polls

Air pollution hurts Bangladesh GDP as well as health: World Bank

India plans federal oversight of all real-money online games

PM Shehbaz felicitates people of Sindh on culture day celebrations