Another vaccine milestone, another Sterling jump
The Government's announcement yesterday that it has smashed its target of giving the first vaccine dose to the most vulnerable citizens has caused the Pound to rally. We are seeing fresh 9-month highs against the Euro and a 34-month best against the US Dollar currently. Nearly 2-million more people have been vaccinated compared to the original target and scientists believe this should now ease the pressure on the NHS and allow for a sustainable exit from lockdown.
A study from The Association of Anesthetists suggests the vaccines already given, will stop 95% of deaths and drop hospital cases by 60% by March. However, the reductions would not occur until April and so this will play a part on the Prime Minister's plans. It's thought that restrictions would be eased somewhat in the second week of March with hospitality opening up at the beginning of April.
Global investors are in buoyant mood over the 'G10 vaccine champion' and Sterling has set its sights on the psychological barriers of £-€1.15 & £-$1.40 much earlier than expected. Both currency pairs have risen over 2% in 5-weeks and gone the complete opposite way analysts originally predicted in Q1. The Government's 'out of lockdown roadmap' announcement this time next week will be huge news for both the UK & £.
It was an extremely quiet week in terms of market volatility last week (even with the record low GDP data) with Sterling-Euro moving just 0.4% over 5-days. This is good news for the Pound, as it means positions are getting consolidated and the recent gains are not just for the short term. £-$ is on a different trajectory as we keep saying and this currency pair gained an easy 0.8% overall last week.
I can see the Pound making a good go of it this week and is already trading up 0.5% across the board. The forementioned trading levels are in reach and we could see investors plow into short term positions to give £ a little push. There are important economic days ahead this week too which will play a part with Friday being a real market-mover.