The pound sterling struck a 2-month peak against the common currency euro during London trading on Wednesday. The move was a result of optimism that a coronavirus vaccine, now in development, could provide a strong jolt to the UK economy. On Monday, pharmaceutical giant Pfizer announced that an experimental vaccine for COVID-19 is being developed which has a 90% efficacy rate. The UK economy has been nearly decimated by the coronavirus after the various measures put in place by the government in an effort to thwart the spread. Hopes that a Brexit deal will soon be announced is also helping to boost sterling. The positive news is shifting investor sentiment away from expectations of a negative rate environment from the Bank of England.
In London trading as of 10:52 am, the EUR/GBP was trading at 0.8886 pence, down 0.2234% and sliding off the session high of 0.89193 pence while the low was recorded at 0.88615 pence. The GBP/USD was lower at $1.3256, down 0.0957%; the pair has ranged from a low of $1.32384 to a high of $1.33150. The GBP/JPY was higher at 139.759 yen, a gain of 0.073% and off the session peak of 140.358 yen.
RBNZ Policy Lifts Kiwi Dollar
The Reserve Bank of New Zealand announced that it would leave interest rates at the current level of 0.25%, much as analysts predicted. A new “tool” that is intended to lower bank borrowing costs in an effort to encourage more lending was announced in the RBNZ policy statement; again, much expected by analysts. In his statement to the media, RBNZ Governor Adrian Orr said that the economy had been somewhat more resilient than expected; for investors, that suggested that the likelihood that the RBNZ would consider negative rates was reduced. The NZD/USD was trading higher at $0.6887, a gain of 0.8772%, moving away from the session peak of $0.69057.