Despite a bullish Dollar, Sterling was a top performer on Thursday as it notched important gains against the Euro before the close. The Pound continued to perform well after last nights virtual EU summit which saw Ursula von der Leyen reveal that of the 33M vaccines made by producers in the EU, 21M went to the UK. Last week the EU threatened to block exports to countries with a better record than the EU in vaccinating its population, or those that restrict exports through law or in their contracts with suppliers. Von der Leyen reiterated this stance last night in a tweet stating, “the EU needs to ensure Europeans get a fair share of vaccines”. In a joint statement on Wednesday, both sides said that they were committed to finding a “win-win” solution. While the European vaccine effort could be described as ‘poor’, the UK’s roll out has been almost solely described as a great success. This reason has been the main catalyst to Sterling being one of 2021’s top G10 currencies, mainly due to the fact that the more people get vaccinated, the quicker Britain can lift restrictions and unlock the economy. If the UK does not keep to its expectations of the government’s road map, it is almost certain that there will be drastic Sterling depreciation.
Cable started the day weak at 1.3682 but was able to gain some momentum after 09:00. GBPUSD continued to spike throughout the session and finally closed the day at 1.3721.
GBPEUR was able to capitalize on Europe’s vaccine issues as it climbed back above the 1.16 mark. The pair started Thursday at 1.1580 and closed the session at 1.1652.
With the Greenback close to 4-month highs EURUSD was forced below the 1.18 handle. After opening the session at 1.1816 the pair was unable to sustain itself and finished the day at 1.1775.
The recent rise in the U.S. Dollar is due to the markets ‘risk-off’ sentiment, thus creating a demand for the safe-haven currency. Not only this, upbeat U.S. GDP figures came out better than expected yesterday at 4.3%, forecasted at 4.1%. Also, arguably more importantly, Jobless Claims fell to 684K, which also exceeded expectations. The Greenback has dropped off this morning but still remains on track for its best week of 2021.
