Market Update

  • July 7, 2021

The pound has steadied against major currencies this morning after hitting a week’s high against the dollar and a 12-day high against the euro this week as Britain set out reopening plans following the COVID-19 pandemic.

Sterling had found support this week on British Prime Minister Boris Johnson’s plans to COVID-19 restrictions in England in two weeks’ time.

The Prime Minister said the government aimed to end restrictive measures on July 19, with a final decision to be taken next week. He said the step would end formal limits on social contact, the instruction to work from home and mandates to wear face masks.

The UK government’s decision to go ahead with a further easing of restrictions on 19 July has endorsed the market’s relatively relaxed stance towards the recent flare-up in Covid-19 cases in the country.

Sterling has been among the top performing G10 currencies this year following Britain’s quick vaccination rollout.

Those gains have evaporated in recent weeks as other countries implemented successful vaccination programmes and as the Federal Reserve hinted at an earlier than expected end to easing monetary policy, giving the dollar a boost.

Another reason for the recent leg lower in the pound was a warning by Bank of England governor Andrew Bailey against an overreaction to inflation in Britain.

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