LONDON: Sterling steadied after a weaker start on Tuesday, lacking momentum as investors waited for more concrete signs of the impact of the UK’s latest lockdown easing measures, while political developments presented only a limited downside risk.
The pound has struggled to gain impetus so far this month, as a boost from the UK’s speedy vaccine rollout - the so-called “vaccine trade” - fades. Investors are now looking for indications of how economic activity picks up after some lockdown restrictions were lifted on April 12.
British retailers reported the sharpest upturn in sales since 2018 this month as non-essential retail began to reopen, a survey showed. Jane Foley, head of FX strategy at Rabobank, said that such data was not enough to move sterling higher, because much of the optimism around the economy reopening is already reflected in market positioning on sterling.
For sterling to strengthen, “we’d need to see official data shining much stronger and I think that that would then have to go through into a less dovish tone from the Bank of England,” Foley said. At 1544 GMT, the pound was up less than 0.1% against the dollar, at $1.3916. Versus the euro it was up around 0.1% at 86.8 pence. Presenting a downside risk for the pound, Prime Minister Boris Johnson is facing a stream of allegations - all of them denied - about matters ranging from his muddled initial handling of the COVID-19 crisis to questions over who financed the redecoration of his official apartment.
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