The pound continued its impressive gains against the euro yesterday, registering its fourth consecutive day of gains. It is worth noting though, that whilst the pound has pushed up across its ranges against both euro and the dollar for instance, it has yet to pass the 1.1280 area on GBPEUR and 1.3700 on GBPUSD – both would need to be surpassed to produce a foundation on which the pound can build on.
The key factor in the sterling surge in the short term is mainly down to the comments of Bank of England Governor Andrew Bailey’s comments on negative interest rates. As I mentioned in our 2021 market update yesterday, avoiding negative interest rates on the pound was vital to the near term health of pound pairs. Bailey insisted that there were “lots of issues” with cutting rates below 0% which would harm the UK’s banking system – the news prompted a sigh of relief from markets for the time being, as if the move came into being, the likely impacts on the pound could be drastic.
The other key metric that is pushing GBP in the right direction is that of vaccine and case numbers. The UK remains broadly in front of its peers globally in the race to vaccinate – barring only Israel who have surged ahead. With regards to case numbers, although case numbers daily are still stubbornly high, they have now fallen for three consecutive days – any data like this will be seized on by markets looking to back countries who are getting their numbers down the fastest.
Have a great day.
Joshua Haden-Jones, Senior Relationship Manager.
Whilst every effort is made to ensure the information published here is accurate, you should confirm the latest exchange rates with WorldFirst prior to making a decision. The information published is general in nature only and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available here.
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