Sterling Rises above $1.39, Trades at Three-year High

16 Feb 2021 · 3rd Party Analysis

Sterling Rises above $1.39, Trades at Three-year High

WRITTEN BY ThorFX

In Summary

  • Sterling bull run continues against a weaker dollar
  • The UK meets Covid-19 vaccination target

The Great British pound has risen above $1.39 for the first time in almost three years. Boosted by positive vaccine developments and increased hopes for easing of measures, the UK’s currency hit a high of 1.3950 against the US dollar. The Sterling advances for a third straight day against a weaker dollar to its highest level since April 2018 when GBPUSD traded around the 1.3900 marks.

Sterling bulls seem unstoppable in their efforts to continue reaching for the higher ground even amid a weak British economy and post-Brexit trade frictions with the European Union. The pound was also higher against the euro as well as the Swiss franc and the Japanese yen. The GBP/CHF pair is trading above its pre-pandemic levels near 1.2400, while the GBPJPY posts an even stronger move to the upside, peaking at a high of 147.30, a level not seen since Dec 2019. For the past three days, the sterling has advanced as much as 1.95% against the yen, making the pair one of the best performers in the currency market for the week so far.

In Tuesday’s trading, the sterling remains on the front-foot as traders and investors monitor the developments in the UK in relation to the coronavirus restrictions. The UK recorded 15 million Covid-19 vaccinations, a target set by the Tory government in early January. Having met the milestone before the expected date of Feb 15, Prime Minister Boris Johnson will now consider whether to begin reopening the economy. PM Johnson described the successful effort by calling it an “extraordinary feat” and confirmed that the UK had met the target to vaccinate the large part of the top four priority groups.

The UK Looks Beyond the Lockdown

Earlier this year, Mr. Johnson vowed to make the vaccine available by Feb 15 to all individuals over age 70 and all those who are clinically vulnerable. Yesterday, the UK government announced that the target had been met. “It has been a truly national, UK-wide effort. We have done it together” said Boris Johnson in a video statement on Twitter on Sunday. “We’ve still got a long way to go to. And there will undoubtedly be bumps in the road. But after all, we’ve achieved, I know we can go forward with great confidence.” he added in conclusion.

The UK has delivered one of the most successful vaccine campaigns in the world, administering roughly 2 million vaccines per week so far. Matt Hancock, the UK’s health secretary, also praised the “fantastic milestone” in the battle against Covid-19. “In less than 10 weeks we’ve jabbed over 15 million people across the UK”, he said in a statement.

This week Britain’s virus infections have marked a significant drop, sliding to the lowest levels since October 2020. While the infection rates are coming down, Prime Minister Johnson has emphasized the need for caution as the government is under pressure to unwind restrictions. Mr. Johnson has said he wants schools to reopen on March 8 and gradually relax outdoor recreations, followed by retail shopping and the hospitality sector. Prime Minister Johnson is expected to appear before the public on Feb 22 and outline a plan for easing the current lockdown.

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