Pound Climbs ahead of Brexit Meeting, Vaccine Pace on Track

11 Feb 2021 · 3rd Party Analysis

Pound Climbs ahead of Brexit Meeting, Vaccine Pace on Track


In Summary

  • Sterling trades at a 2.5-year top against the US dollar
  • The UK and EU meet to discuss the Northern Ireland Protocol

The Great British pound reached a 2.5-year high yesterday after Bank of England governor Andrew Bailey gave a speech on the state of the economy, the prospects for recovery, and the relationship with the European Union. In his address, Governor Bailey said the UK intends to keep up with banking rules, regulations, and international standards.

“I believe we have a very bright future competing in global financial markets underpinned by strong and effective common global regulatory standards”, said Mr. Bailey in a webinar by the City of London on Wednesday. “Let me be clear, none of this means that the U.K. should or will create a low regulation, high risk, anything goes financial center and system”, he emphasized.

The Brexit saga made a sudden return to the agenda today after the European Union gave a cool response to the UK’s call to reset the UK-EU relationship. The UK has asked for a delay in the implementation of border checks on some goods upon entering Northern Ireland. UK’s Cabinet Office Minister Michael Gove said the Northern Ireland part of the Brexit deal was flawed and called for a reset. The appeal was rebuffed by the bloc with a letter by the European Commission Vice-President Maros Sefcovic. His response said that the measures in the part of the Brexit deal related to Northern Ireland “need to be fully and faithfully implemented”. Mr. Gove and Mr. Sefcovic are expected to meet today in London and discuss the Northern Ireland Protocol in person.

The UK’s Vaccination Plan Gains Traction

Meanwhile, the GBPUSD pair is hovering around 1.3800 to 1.3850 on Thursday morning, a day after the 2.5-year peak at 1.3866. The GBPJPY is also hovering near its recent highs around 144.70 to 145.00, levels not seen since February 2020. Similarly, the GBPCHF pair also returned to pre-pandemic levels above 1.2300 with a high of 1.2371.

On the Covid front, the UK remains on track to deliver 15 million doses of the vaccine by mid-February. Just over 13 million people in the priority categories have had their first dose so far. According to the latest figures, 411,812 jabs were administered across the UK on Tuesday. On Wednesday, Prime Minister Boris Johnson announced that the government will now plan the next stage of the vaccine rollout aimed to vaccinate a further 17 million people in the UK. Cheering the progress at a Downing Street press conference, PM Johnson said “there’s no doubt we have made great strides”.

Elsewhere, US President Joe Biden had his first conversation after taking office with Chinese leader Xi Jinping. President Biden raised his concerns about China’s “coercive and unfair economic practices”. Additionally, he addressed human rights abuses in the Xinjiang region and the country’s increasing restrictions on political freedoms in Hong Kong. China’s state news agency Xinhua warned that the US should respect China’s interests and act with caution when trying to interfere with China’s domestic affairs.

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