It is a good day for the pound, as it rose to a 13-month high against the euro on March 18, shrugging off COVID-19 vaccine concerns ahead of a Bank of England meeting. Interestingly, the central bank is expected to leave the interest rates unchanged and maintain the Bank of England’s bond-buying program.
People should keep in mind that the pound was 0.45% higher against the euro at 85.33 pence at 11:00GMT. As a reminder, it fell to its lowest level since March 5 on Tuesday after several European Union countries suspended their rollout of the AstraZeneca vaccine over safety concerns.
According to the European Medicines Agency, there is no evidence to suggest that the vaccine is unsafe. This is not the end of the story as pound shrugged off another issue. On Wednesday, the United Kingdom National Health Service warned of a big reduction in available vaccines from March 29.
Pound and coronavirus pandemic
Interestingly, Britain’s swift vaccine roll-out, as well as declining numbers of COVID-19 infections, helped to support the pound in 2021. It is worth mentioning that analysts expect the Bank of England to maintain its crisis-fighting stimulus program.
Furthermore, the pound was 0.1% higher against the dollar at $1.3985, after touching a week high of $1.4001.
As a reminder, a rise in bond yields in early London trade helped the dollar strengthen after the Federal Reserve’s announcement. Let’s have a look at the information provided by the Federal Reserve. The bank expects the U.S. economic growth and inflation to pick up during recovery from the pandemic in 2021. Moreover, it repeated its pledge to keep its target interest rate near zero.
It is worth noting that British government bond yields rose to a one-year high after ten-year Treasury yields reached their highest levels in 13-months above 1.70%.
Moreover, dwindling expectations that the Bank of England will push interest rates below zero helped to support the pound. Another factor that helped to support the pound is the Brexit trade deal.
The coronavirus pandemic remains one of the most serious challenges for countries around the world. It would take time to deal with all issues caused by the pandemic due to the sheer number of problems. Nevertheless, governmental and private organizations are working hard to improve the situation as soon as possible. Hopefully, governments of many countries are willing to do whatever it takes to return to pre-coronavirus results.