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Pound feels pressure from potential vaccine shortages

- Currencies Direct

Pound feels pressure from potential vaccine shortages

Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks...

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The pound has found its attempts to rally over the past two weeks thwarted by concerns that both the UK's vaccination programme and the government's reopening plans could be delayed. During this period, we've seen GBP/EUR remain close to €1.16, whilst EUR/GBP has held at around £0.85. Meanwhile, GBP/USD briefly broke through to $1.40 before stumbling back to $1.38, while EUR/USD has traded between $1.19 and $1.18.

What's been happening?

In the past couple of weeks, we have seen the pound make a few attempts to strengthen, as the appeal of the currency has been bolstered by an increasingly upbeat outlook from the Bank of England and a smaller-than-expected contraction of GDP in January. However, fears the reopening of the UK's economy could be derailed by a shortage of vaccines have since seen almost all of these gains erased. At the same time, in light of some mixed economic releases and fears of a third wave of coronavirus cases spreading throughout Europe, the euro has struggled to find support so far this month.

The US dollar, meanwhile, continues to garner support from surging US Treasury yields, although faced a major setback after the Federal Reserve struck a more dovish than expected tone following its latest policy meeting.

What do you need to look out for?

Looking ahead, Europe's coronavirus resurgence and its vaccine woes are likely to remain a key concern for not only EUR investors, but also GBP investors as these issues look increasingly likely to spill into the UK. Also influencing the pound will be a slew of high-profile UK data releases, which could prove supportive of Sterling if they indicate UK economic activity hasn't been quite so damaged by the latest lockdown as investors initially feared.

Meanwhile, the contrast between the accelerating US vaccine drive and the situation in Europe is likely to see investors favour the safe-haven US dollar in the coming weeks.

At Currencies Direct, we're here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers. Since 1996, we've helped more than 325,000 customers with their currency transfers, just pop into your local Currencies Direct branch or give us a call to find out more.

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