On February 15, the British pound increased over $1.39 for the first time in nearly three years, boosted by broad-based greenback weakness and by optimism for the end of a third national lockdown.
The pound has been a key gainer versus a struggling U.S. dollar this month. The aggressive rollout of the coronavirus vaccination program in Britain boosted optimism. This reassured Britain that its economy will be capable of rebounding faster than its European peers.
Boris Johnson will judge this week how the United Kingdom can exit its lockdowns after vaccinating 15 million high-risk groups.
According to Global Head of Markets at ING, Chris Turnes, GDP resumes reaping the dividends of a strong vaccine rollout. In addition, momentum builds towards a reopening of the economy, probably beginning with schools on March 8.
Britain launched a hotel quarantine system on Monday
The United Kingdom’s Brexit deal with European Union has also removed some pressure from the pound.
Based on ING’ announcement, the reopening of the economy following the post-Brexit re-rating could likely support the pound towards $1.40.
Significantly, the United Kingdom has vaccinated 15.062 million people with a first dose and 537,715 with a second dose. Moreover, according to Health Secretary Matt Hancock, the country anticipates its weekly supply of coronavirus vaccines to boost over time.
Moreover, Britain, which is the home to about 85% of its population, launched a hotel quarantine system on Monday, requiring that passengers arriving from any 33 red list countries spend 14 days in a hotel room under new border restrictions designed to halt new variants of the COVID-19.
The British pound rose by 0.3%. It settled at $1.3895, close to its highest level since late April 2018 of $1.3915 hit in early London trading.
The sterling against the euro boosted by 0.1% and stood at 87.35 pence, after touching a nine-month high of 87.24 pence.