As Covid cases in the UK fell for a sixth consecutive day, the pound continued it’s advance against most of it’s major rivals.
The key level of 1.39 GBP against USD was once again tested, but faced resistance amid safe-have flows caused by geopolitical factors. Against the euro it continued its V-shaped recovery and is once again trading well above 1.17.
The UK’s Covid situation is at a critical junction, which could potentially see it set the global blueprint on how to ‘beat’ the third wave successfully. Its gamble to reopen the economy amid rising cases could well pay off, supporting the narrative of a strong economic recovery.
One the flipside, analysts warn that it’s still too soon to draw any conclusions, especially given the ‘time lag’ included in the measurements. Current readings are all still mostly ‘pre-Freedom Day’, so it’s hard to make any meaningful comments on the effect of the ‘reopening big bang’.
Currently however, that isn’t stopping the pound to make hay while the sun shines.
Have a great day.
Thomas De Caluwé, Relationship Manager.
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