Despite the lifting of restrictions in the UK yesterday, the British Pound was unable to make any real substantial gains against the Euro or Dollar. Daragh Maher, Head of Research, Americas, at HSBC has noted that the lack of upside is due to “the difficulty… that much of the good news is likely already priced in”. HSBC have in fact put out a note to clients that the Pound may still be overpriced – even in the wake of steep declines. The bank suggests that Sterling “looks stronger than rate differentials might warrant, while other nations will eventually close the gap on the UK’s early lead in the vaccine rollout race”. The UK’s world-leading vaccination programme is what prompted Sterling appreciation of late, setting itself apart from other currencies. While ministers have met their target of offering a first dose to the top nine priority groups, many analysts persist that “this story cannot offer the Pound unlimited upside”.
It has been reported this morning by the Office for National Statistics (ONS) that trade between the UK and the EU has somewhat recovered, after a precipitous drop in January. After recording a slump of 42% in January as firms struggled with new rules, official figures show exports to the EU have rocketed to 46.6%. Other figures from the ONS showed the UK economy grew by 0.4% in February but was still 7.8% smaller than a year earlier. A spokesperson commented on the findings, claiming that “the economy showed some improvement in February after the large falls seen at the start of the year but remains around 8% below its pre-pandemic level… Exports to the EU recovered significantly from their January fall, though still remain below 2020 levels. However, imports from the EU are yet to significantly rebound, with a number of issues hampering trade."
GBPUSD started the week at 1.3689 and was able to better this position by the close, finishing Monday at 1.3746.
GBPEUR was stagnant on Monday as the pair looked for direction. After opening at 1.1514 the pair was able to close the day at 1.1543.
EURUSD was able to once again surpass the 1.19 handle yesterday. The pair started the day at 1.1888 and closed at 1.1907.