According to the latest news, the British pound reached its highest level versus the U.S. dollar since April 2018. The sterling was trading below eight-month highs versus the euro on February 9. Analysts say that the United Kingdom’s lead in coronavirus vaccinations was a positive for the currency.
The British currency reached $1.3788 versus the U.S. dollar in early London trading. This is its highest level against the dollar since April 30, 2018. By 0902 GMT, the pound was down 0.15% against the euro and traded at 87.80 pence.
Furthermore, analysts have largely been constructive on the sterling, particularly versus the euro in 2020. Moreover, it’s essential to mention that the United Kingdom’s coronavirus vaccine rollout has been faster than in Europe.
The Bank of England also helped the sterling, which at its meeting last week pushed back at market expectations of negative interest rates. Additionally, money markets do not reflect negative rates from the Bank at least as far out as August 2022.
Speculators boosted their long positions on the sterling
According to Kristoffer Kjaer Lomholt, Chief Analyst, F.X. and Rates Strategy at Danske Bank, the move lower in euro-sterling appears to have taken a pause, which is likely to continue near-term. He also announced that last week EUR/GBP breached key technical levels after the Bank’s meeting.
He added that the U.K. economy is likely to outperform supported by much faster vaccinations.
Furthermore, the ING announced that a bearish bias on the euro-sterling pair is still warranted. The pace of vaccinations between the U.K. and Europe differ.
According to the minister’s announcement on Tuesday, the U.K. is looking at greater testing of all people who have arrived from abroad while they are self-isolating to defend against new modifications of the virus that causes coronavirus.
Based on CFDC data, speculators boosted their long positions on the sterling in the week up to February 2, as they believe that it will strengthen.