Vaccination program continues to boost Sterling
Sterling traded close to recent highs against the euro and posted its best levels since April 2018 against the dollar as the UK’s impressive Covid vaccination programme continued to be supportive for the British currency.
According to the latest figures 352,480 people received a vaccination on Tuesday taking the total percentage of people vaccinated in the U.K. to 18.9%. New Covid-19 infections also continued its downward trend falling by 4476 cases last week to 12364 new cases yesterday.
The above figures are keeping sterling supported as there is an expectation that at the current pace of vaccinations the U.K. economy will get back on its feet quicker than those countries that are lagging behind in vaccinations as there is an assumption at play that more vaccinations mean less Covid infections which means less chance of lockdown restrictions being reintroduced later this year.
As noted above, the U.K. are very close to having 20% of its population vaccinated compared with the European Union who have vaccinated only 3.7%. Added to this, 75% of all Covid deaths in the U.K. were people aged 75+ the fact the U.K. have vaccinated 80% there is an expectation that deaths and hospitalisations will see a significant drop off over the next few weeks. The overall rate of infection has fallen sharply too and is close to 70% lower than its peak. Therefore there is a feeling amongst investors that the worst of the pandemic is now behind the U.K.
Aside from positive vaccine sentiment, sterling has benefited from last week’s Bank of England decision in which the Bank of England downplayed the imminent use of negative rates by saying lenders would need at least six months to prepare for them. Whilst not completely taking them off the table, analysts are expecting the U.K. economy to start bouncing back after six months so the window for negative rates looks to have passed.
U.K. investors will be eyeing the 22nd February in which the government is expected to review the current lockdown restrictions in the U.K. An extension to the current lockdown could weigh on sterling with an easing of restrictions likely to contribute to further sterling strength.
13:30 – USD – Consumer Price Index Ex food and energy (MoM) (Jan) expected to read 0.1%
13:30 – USD – Consumer Price Index Ex food and energy (Yoy) (Jan) expected to read 1.6%
17:00 – GBP – Bank of England Governor Bailey speaks
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