LONDON: The pound was steady on Thursday, edging up against the euro but struggling to regain momentum as market participants waited for indications of how the UK’s lockdown-easing steps will affect the economic recovery.
Sterling had a strong first quarter, helped by relief that a no-deal Brexit was avoided at the end of 2020, by the pace of the UK’s vaccine rollout and by a lessening of negative rates expectations. But it has had a weaker start to April, hurt by profit-taking, and has traded in a close range this week.
At 1135 GMT, the pound was at $1.37755, flat against the dollar. Versus the euro, it was up 0.2% at 86.85 pence per euro. The pair broke the key 0.85 level for the first time in a year at the start of April, before weakening sharply.
England re-opened all retail, hairdressers, gyms and pub gardens on Monday. Scotland, Northern Ireland and Wales are due to re-open different sections of their societies in coming weeks.
Simon Harvey, FX analyst at Monex Europe, said sterling was at an “impasse”, where the lockdown easing measures had been priced in when they were announced, and market participants are now waiting for data to show the impact. “Gauging how the UK consumer reacts to less constraints over its consumption patterns is going to be a very, very key driver over the next quarter,” he said. We see it going up to the $1.40 level by the end of the month and we’re looking for these alternative data points and potentially more timely traditional data points for cable taking the next leg higher,” he said.
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