The British pound strengthened on January 26 as investors returned to risk assets on optimism for more stimulus in the U.S. Furthermore, the United Kingdom’s coronavirus vaccine rollout push over the weekend also offered support to the sterling.
Remarkably, the U.K.’s coronavirus vaccine rollout gathered pace on Saturday, with 5.9 million people now having had the first dose.
The sterling was flat at $1.3677 versus the safe-haven U.S. dollar, after reaching $1.3724 in the morning. Furthermore, on Friday, it declined to $1.3636.
The British pound boosted by 0.1% against the euro and settled at 88.87 pence, close to an eight-month high of 88.30 pence reached last week.
According to Neil Jones, head of FX sales at Mizuho Bank, asset prices are trading firm, volatility is lower, and yields are pushing up, putting the American currency on the back foot and driving the sterling higher.
Broader equity markets, measured by MSCI’s All Country World Index, and Wall Street futures were weaker on January 26, giving the greenback a lift.
The pound hit two and a half year highs against a weakened greenback
Hopes of a U.S. fiscal stimulus package from U.S. President Joe Biden’s administration has benefited the sterling. Significantly, it hit two and a half year highs against a weakened greenback.
The British pound has also reached its highest versus the euro since May 2020 last week, with analysts attributing the sterling’s gains to a slower coronavirus vaccine rollout in the European Union than in Britain.
According to Tuesday’s data, the United Kingdom’s unemployment rate reached its highest. It increased in nearly five years in the three months to November when COVID infections started to grow for a second time, and most of the country reverted to a partial lockdown.
According to official data, redundancies reached a record high, taking the unemployment rate to 5.0%, its highest since mid-2016, although the rise was slightly softer than economists’ forecasts.