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Pound increases gains against euro as Brexit Britain's economy reopens after jab success

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It rose on yesterday’s high by 0.2 percent to make a euro worth 85.32 pence. As recently as last December a euro was worth 90 pence.

Commenting on the pounds recent strong performance, an expert put the jump down to Britain’s vaccination rollout and the gradual easing of lockdown restrictions.

Stuart Cole, chief macro strategist at Equiti Capital, said: “The sterling outlook remains positive, the combination of continued vaccinations, lifting of lockdown restrictions and rising yields all converging to support the pound.”

Speculators also reduced their net long position on the pound – hinting that the currency is performing well.

Mr Cole said this suggests a “pool of untapped potential support for sterling”.

READ MORE: Eurostar fury as UK constructors clashed with French

Analysts say the jab rollout, one of the fastest in the world, has prompted eagle-eyed investors to hedge their bets on a UK recovery well before the Eurozone.

Combined with Chancellor Rishi Sunak’s generous budget – it seems that Brexit Britain is set to boom in the minds of many investors.

“With diverging paths on the vaccination side in the UK and the EU, EUR/GBP may continue to drift lower towards the key 0.85000 support this week,” wrote ING strategists in a note.

Commerzbank strategist You-Na Park-Heger struck a more cautious note.

She said that “even if the UK emerges more quickly from the corona crisis than for example the EU a large share of the positive news is likely to be priced in already.”

“Even though Sterling is going to be able to benefit from the projected end of the pandemic short-term, medium-term we remain sceptical about sterling,” she added.

Elsewhere, Britain’s financial services minister said that it will focus first on regulating stablecoins, rather than the broader cryptocurrency market.

Speaking about yesterday’s gains Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets, said the vaccine row between Britain and the bloc was having a limited impact on the pound because it had not escalated into a tit-for-tat trade spat.

And Kallum Pickering, senior economist at Berenberg, added: “The economic wheel of fortune seems to be turning back in the UK’s favour.

“A successful vaccine rollout, aggressive policy support and a solid global backdrop set the stage for at least two years of rapid economic rebound from the massive pandemic shock of 2020.”



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