Sterling the winner in vaccine development

Hi everyone,


Well what a week it has been so far for the Pound, registering a 2-month high against a basket of currencies. As you all would have already heard, Pfizer have a vaccine that has been 90% successful in trials. So why has Sterling jumped on the news?

Improved investor sentiment has helped rally the Pound as a vaccine would mean no further lockdowns, which hurts the UK more than most countries (services nation). The UK was the first nation to sign a binding order with Pfizer which means we are at the front of the queue should the vaccine be rolled out. That means our economy would get a head-start and outperform other nations early on the comeback trail. The UK is also set to benefit from a strategy of investing in a basket of vaccines, more than any other country. There are currently 150 vaccines in development and the UK have the biggest pre-orders of the top 6. Therefore the Pound has risen on these points and is holding onto the gains for now.

The last couple of days the market has been seeing some huge volatility on the back of Brexit and the vaccine. On the former, Reuters published today that next week's Brexit deadline will be missed. This was pretty obvious anyway, but the Pound did take a slight hit from the report. As we mentioned earlier in the week, a deal is still likely but won't be reached until early-mid December we believe. How the Pound performs over the next couple of weeks is impossible to predict, but the recent rise is hard to ignore if you are holding the £;

£-$ has gained 3% in 10-days earning an extra $400 on a £10k transfer
£-€ has gained 2% in just 2-days earning an extra €225 on a £10k transfer

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