The investors worst fear for sterling was a Brexit no deal and this kept the pound fragile since the referendum in June 2016. Boris Johnson has now managed to get the elusive deal we have all been waiting on and though the deal appears to be no great shakes, a no deal scenario is now off the table and now the pound is firmly out of the traps.
There was not the sudden jump in value predicted by many upon the announcement of the deal and this can be justified by the fact the quality of the deal was not very impressive to say the least. We have now however seen the pound make gradual gains hitting record highs against some currencies.
GBP/USD has been as high as 1.41 in late February, the highest levels since April, 2018 and GBP/EUR yesterday hitting 1.17, the highest levels since February 2020.
The other key factor for sterling’s rise in value is the rapid rate of vaccination in the UK. Over 25 million people have now been vaccinated in the UK and it is hoped that all adults will have had the opportunity to be vaccinated by the end of July. To say the vaccine roll out is impressive is an understatement.
This certainly bodes well for the pound as this means the UK will come out of the pandemic in a quick fashion and the economy will be able to begin repairs on the economic damage caused by Covid-19.
Later today we will witness the Bank of England (BOE) interest rate decision. It is unlikely there will be any change to current interest rate levels. We currently sit at 0.1% and at one point there was rumours we could see interest rates drop into negative territory. This could prove very costly for the UK economy as investors may choose to place their funds elsewhere if it is going to cost them to simply hold funds.
The chance of this happening is thankfully now slim and this can be attributed to the rate of vaccination here and as mentioned earlier the prediction that Britain could recover in a relatively quick fashion from the economic damage caused by the pandemic.
If there is no change in interest rates do not expect movement on the market, what could cause volatility however is the BOE minutes as this will provide justification from the Monetary Policy Commission’s (MPC) on their decision and they could also offer insight into future monetary policy.
Sterling has breached 1.17 on a few occasions in the last few weeks, but each time it is breached we have seen the pair retract, short term 1.17 has held up as a resistance point, so if purchasing euros it may prove wise to purchase if GBP/EUR sits above 1.1650 for example.
Euro sellers may still hope of a fall in sterling value back to the levels we saw late last year, but at present there is little justification for the pound to fall in such a manner. It is important to remember that at that stage the lack of clarity surrounding Brexit was still weighing heavily on the pound. With a no deal scenario off the table it would now be very surprising to see GBP/EUR fall back to the levels we saw in 2020.
Europe remains divided on the safety of the AstraZeneca vaccine with France, Germany, Spain and Italy all suspending vaccinations in a major blow to the fight against the pandemic in Europe.
Other EU nations such as Belgium and Poland are continuing issuing vaccinations using the AstraZeneca vaccine.
There have been fears that the vaccine has potential to create blood clots among some vaccinated.
The European Medicines Agency (EMA) will release its findings regarding the vaccines potential to cause blood clots later today and this could well influence Euro value.
An EMA representative said it was still "firmly convinced" of the benefits of the AstraZeneca drug. EMA head, Emer Cooke, stated that the blood clots highlighted by some countries were relatively common in the general population.
She said "I want to stress at present there is no indication that vaccination has caused these conditions,"
If the AstraZeneca vaccine is given the OK and reimplementation begins we could see Euro strength.
Ursula von der Leyen, the European Commission President made a bold statement yesterday. She stated that Europe is preparing to use emergency powers to try and stop the shipping of the AstraZeneca vaccine where it is produced back to the UK due to the shortage of vaccines in Europe. There was little movement on the market following the news, but this does have the potential to cause volatility if the European Commission intend to follow through with the threat.
European Central Bank (ECB) president, Christine Lagarde is due to speak later this morning regarding the health and outlook of the Eurozone economy and it would be well worth keeping your eyes on, as her comments could well cause change in the value of the Euro.
The US dollar has been making gains against the majority of major currencies of late due to the positivity surrounding vaccinations. There is hope that all US adults will have had the opportunity to have had a vaccination by the end of May. This of course is good news for one of the largest global economies.
There has not been such advances against the pound however as the UK also has a very impressive vaccine roll out. At present it looks as though 1.40 is the peak of the market short term and seems to be holding up as a resistance point. GBP/USD did hit 1.41 in late February, but there was only a small window of opportunity to purchase at this level.
It maybe the case that sterling’s advances may now be stifled thanks to the impressive vaccination program in the States. Considering the gains we have seen already for sterling against the dollar it could prove wise to take advantage of current levels.
Today we will witness the release of US continuous jobless claims. Employment is a key barometer in assessing the health of an economy and this data does have the influence to move the markets. Figures are predicted to land at 4.07 million, down from previous data which landed at 4.144 million. If we see claims fall further than 4.07 million this could create US dollar strength.
From start to finish with all contacts you feel like a VIP client even if you are exchanging small amount of currency. Always polite cheerful and give you straight talking advice before making the decision. Daniel Johnson and the team are a pleasure to deal with.
Daniel Johnson was very helpful throughout the transaction. It was quick and hassle free. I would definitely use this method again.
Excellent… can’t fault it… Thankyou Daniel.
Daniel Johnson explained clearly and in an easy to understand way what the process would entail before I made the transaction to pay the deposit on an overseas property. The transaction was carried out in an efficient and timely manner and I felt no pressure at any time.