BoE hold interest rates as sterling strength continues
Sterling continued its impressive start to 2021, once again jumping on Friday, this time to near 6 months highs against both the Euro and the US Dollar amongst other G10 currencies in response to the Bank of England’s decision to hold interest rates at current levels and also giving no indications they plan to change from this course in the near future.
The Bank of England did however lower its Q1 growth forecasts for the UK but this was not enough to stem Sterling strength largely driven by the current success of the vaccine rollout. News from the weekend suggests the Oxford AstraZeneca is not as effective against the new ‘South Africa variant’, it is yet to be seen if this will have any major impact on the current vaccine plans from the UK government.
Despite losing ground to GBP, the US Dollar posted gains against almost all other major currencies as there was growing optimism that the US economic recovery will outpace its peers as their own vaccine rollout is now well underway.
The Dollar has also found support in the market through longer-term US treasury yields with the markets readying itself for huge fiscal spending plans from new President Joe Biden.
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