The pound fell to a six-week low against the dollar yesterday, as global stock markets retraced due to the increasing concern about the global economy’s exit from Covid restrictions. With a fresh wave of increasing cases in Europe leading to further lockdowns and a slower than expected vaccine rollout plan globally, the mood music has dampened for the time being. Sterling is closely associated with global markets and as sentiment rises and falls, the pound goes with it.
Since the turn of the year, the pound has gained on strong vaccination numbers. With the roadmap out of the current lockdown going to plan, there is seemingly an abundance of promise for sterling in the medium to long term. However, with the current tensions rising over the potential of the EU blocking exports of Covid vaccines produced on the continent, the UK will be keeping a keen eye on the EU summit tomorrow. Boris Johnson is said to be attempting to reduce tensions, so the UK can continue with its rapid vaccination rollout.
With the global uncertainty it is typical that the haven dollar gains. As mentioned previously GBPUSD has hit a six-week low and EURUSD has hit a four-month low with the dollar strength. Around lunch time in the UK, the US will release the durable goods order number for February, which is expected to show a pick up in activity in the States.
Have a great day.
Jack Nicholls, Relationship Manager.
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