AIRLINK 73.00 Decreased By ▼ -2.16 (-2.87%)
BOP 5.35 Decreased By ▼ -0.10 (-1.83%)
CNERGY 4.31 Decreased By ▼ -0.08 (-1.82%)
DFML 28.55 Increased By ▲ 0.91 (3.29%)
DGKC 74.29 Increased By ▲ 2.29 (3.18%)
FCCL 20.35 Increased By ▲ 0.06 (0.3%)
FFBL 30.90 Decreased By ▼ -0.15 (-0.48%)
FFL 10.06 Increased By ▲ 0.09 (0.9%)
GGL 10.39 Increased By ▲ 0.12 (1.17%)
HBL 115.97 Increased By ▲ 0.97 (0.84%)
HUBC 132.20 Increased By ▲ 0.75 (0.57%)
HUMNL 6.68 Decreased By ▼ -0.19 (-2.77%)
KEL 4.03 Decreased By ▼ -0.17 (-4.05%)
KOSM 4.60 Decreased By ▼ -0.17 (-3.56%)
MLCF 38.54 Increased By ▲ 1.46 (3.94%)
OGDC 133.85 Decreased By ▼ -1.60 (-1.18%)
PAEL 23.83 Increased By ▲ 0.43 (1.84%)
PIAA 27.13 Decreased By ▼ -0.18 (-0.66%)
PIBTL 6.76 Increased By ▲ 0.16 (2.42%)
PPL 112.80 Decreased By ▼ -0.36 (-0.32%)
PRL 28.16 Decreased By ▼ -0.59 (-2.05%)
PTC 14.89 Decreased By ▼ -0.61 (-3.94%)
SEARL 56.42 Decreased By ▼ -0.91 (-1.59%)
SNGP 65.80 Decreased By ▼ -1.19 (-1.78%)
SSGC 11.01 Decreased By ▼ -0.16 (-1.43%)
TELE 9.02 Decreased By ▼ -0.12 (-1.31%)
TPLP 11.90 Decreased By ▼ -0.15 (-1.24%)
TRG 69.10 Decreased By ▼ -1.29 (-1.83%)
UNITY 23.71 Increased By ▲ 0.06 (0.25%)
WTL 1.33 Decreased By ▼ -0.01 (-0.75%)
BR100 7,434 Decreased By -20.9 (-0.28%)
BR30 24,206 Decreased By -44.4 (-0.18%)
KSE100 71,359 Decreased By -74.1 (-0.1%)
KSE30 23,567 Increased By 0.5 (0%)
Markets

Sterling stabilises, set for biggest weekly fall versus euro since Sept

  • The pound had its best quarter against the euro since 2015 in the first three months of 2021, boosted by the UK's vaccine rollout, which is one of the fastest in the world, as well as a fading of negative interest rate expectations.
  • Versus the dollar, the pound was down 0.1% at $1.3723, and also on track for a weekly loss.
Published April 9, 2021

LONDON: Sterling steadied on Friday, having touched a two-month low against the dollar in early London trading, and was set for its biggest weekly drop against the euro so far this year, hurt by profit-taking after a strong first quarter.

The pound had its best quarter against the euro since 2015 in the first three months of 2021, boosted by the UK's vaccine rollout, which is one of the fastest in the world, as well as a fading of negative interest rate expectations.

Analysts also attributed its strengthening against the euro to an expectation that economic recovery in the UK would outpace that in the euro zone.

But that trend reversed this week, with sterling falling against the euro on Tuesday, Wednesday and Thursday - a move which market participants said was amplified by a squeeze of euro-pound short positions.

At 1207 GMT, the pound was at 86.615 pence per euro, up around 0.2% on the day. It remained on track for its biggest weekly fall since September 2020, down 1.9%..

Versus the dollar, the pound was down 0.1% at $1.3723, and also on track for a weekly loss.

Britain has surged ahead of the rest of Europe in the race to vaccinate its population, with almost half of its citizens receiving a first dose.

But supply issues from surrounding its main Oxford-AstraZeneca shot have slowed progress in recent days, while Germany's inoculation campaign has sped up.

"The selling of sterling may have been connected to buying of euros," Marshall Gittler, head of investment research at BDSwiss, wrote in a note to clients.

"It looks like perhaps people are getting more optimistic about the rollout of a vaccine in the EU and less optimistic about the comparable move in the UK."

But other analysts remained upbeat about the pound's prospects over the next few months.

"I would still stick to the view that...sterling's still an undervalued currency," said Dean Turner, chief euro zone and UK economist at UBS Global Wealth Management. "I would expect euro-sterling can go below 0.85 this year."

Similarly, ING wrote in a note to clients that the euro-sterling short squeeze "may have run its course ahead of 0.87" and that they still expect the pair to reach 0.85 later this quarter.

UniCredit strategists told clients that cable weakening towards $1.37 is an opportunity to buy the dips.

Comments

Comments are closed.