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

Sterling holds firm after UK COVID-19 infections drop

  • But the pound was an outlier, mostly holding on to its recent gains
Published July 28, 2021
Follow us

LONDON: Sterling held firm in early London trading on Wednesday, close to a 13-day high against the dollar despite a broader tone of risk aversion in currency markets ahead of a US Federal Reserve meeting.

Caution ahead of the Fed meeting later in the session pushed the dollar index higher and mostly saw riskier currencies lose out, with a fall in Chinese equity markets also contributing to the "risk-off" moves.

But the pound was an outlier, mostly holding on to its recent gains. It saw a sudden surge on Tuesday around the time at which daily foreign exchange benchmarks are calculated.

Sterling falls against dollar

At 0808 GMT on Wednesday, the pound was at $1.3869, close to its highest in 13 days. It was steady against the euro, having briefly strengthened to 0.84995 earlier in the session - crossing the key psychological 0.85 level for the first time since April.

Analysts attributed the pound's gains to COVID-19 cases in Britain declining over the last seven days, although British Prime Minister Boris Johnson advised against drawing conclusions from the data, saying it was too early to assess whether there was a definite trend.

Sentiment was also lifted by an expected lessening of travel restrictions.

The decline in infections "has very much put a dent into fears that had been growing that UK growth in H2 was going to be less than previously expected", said Stuart Cole, head macro economist at Equiti Capital.

"This sentiment had been weighing on sterling and as it has dissipated, so the pound has started to claw back some of its lost ground."

Most lockdown restrictions in England were lifted on July 19. Speculators went net short on the pound for the first time since December 2020 in the week up to last Tuesday, CFTC data showed on Friday.

"Sterling is the best performing G10 currency so far this week, as it detached from global risk appetite dynamics and may have been buoyed by a slowdown in UK Covid-19 cases, which is raising hopes that the government's decision to lift almost all restrictions may prove to be a sustainable approach," wrote ING FX strategists in a note to clients.

ING said that sterling may test the 0.85 level versus the euro today, as there may be some hawkish speculation about the Bank of England meeting next week.

The BoE looks set to keep its stimulus running at full speed next week despite two policymakers breaking ranks to suggest that its nearly 900 billion pound ($1.2 trillion) bond-buying scheme might have to end early as inflation speeds up.

Comments

Comments are closed.

Sterling holds firm after UK COVID-19 infections drop

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

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

Effective Nov 2022: Agri consumers of Discos, KE have to pay Rs23.30/unit

Provinces’ power sector schemes: Rs8.11bn approved by ECC

Opec+ likely to maintain oil output levels

Attack on diplomat: FO declines to confirm reports about suspect’s arrest

England set Pakistan 343-run target in first Test

PTI Sindh MPAs hand in their resignations

Pakistan ‘ever ready’ to take fight back to enemy: COAS responds strongly to India’s belligerence

IK says will dissolve assemblies ‘very soon’