Sterling consolidates near six-day highs vs dollar, euro

LONDON: Sterling consolidated near a six-day high against both the dollar and the euro on Monday, extending gains from a late recovery last week after it hit its lowest levels since December 2020.

Rising inflation expectations early last week saw bond yields climb higher and hit risk sentiment in equity markets, pushing sterling to $1.3412, its lowest level since December 2020. Sterling moves closely in line with global risk sentiment.

The pound has recovered since the latter part of last week, hitting $1.3610 by afternoon trade in London on Monday, its highest since Sept. 28. That leaves the currency slightly negative to the dollar on the year.

Sterling was one of the best-performing G10 currencies against the dollar in the first half of 2021, boosted by a global reflation trade and optimism over Britain's vaccination programme. But a post-Brexit hangover has left Britain facing a range of problems from a shortage of workers in supply chains and disputes with the EU over Northern Ireland.

Shortages of workers after Brexit and the COVID-19 pandemic have sown disarray in some sectors of the economy, disrupting deliveries of fuel and medicines and leaving more than 100,000 pigs facing a cull due to a lack of abattoir workers.