Sterling steadies below $1.38

LONDON: Sterling steadied near $1.38 against the dollar on Monday as a decline in concerns about Britain's COVID-19 vaccine supply from the European Union helped turn around some of the currency's recent losses.

The EU last week stopped short of imposing a ban on vaccine exports, a proposal that had caused concern in Britain, which relies on imports of COVID-19 inoculations for its rapid vaccination programme, which has benefited the pound.

Expectations that Britain's economy will reopen quickly after its rapid vaccine rollout lifted sterling to $1.42 in February, at the time making it the best performing G10 currency.

But worries about vaccine supply from the EU as well as a strengthening dollar have pulled the pound off its perch.

On Monday, it traded 0.2pc lower against the dollar at $1.3771, having recovered some of last week's losses on Friday, just shy of $1.38.

Against the euro, it traded 0.2pc higher at 85.39 pence

"Overall, with UK-EU tensions over vaccine supplies easing and vaccinations in the UK keeping a good pace, markets continue to see the UK Government's timeline to re-open the economy as realistic and therefore sterling is retaining some better resilience than other G10 currencies to USD appreciation", said Chris Turner, ING's global head of markets and regional head of research for UK and central and eastern Europe.

"Concerns about a worsening virus situation and the slower vaccination progresses in the eurozone may widen the UK-EU gap in terms of recovery expectations and we could see EUR/GBP test the key 85 pence support in the coming days."

Speculators reduced their net long positions on the pound for a third consecutive week in the week up to last Tuesday, CFTC data on Friday showed.