The government's efforts to hasten the pace of the COVID-19 vaccination schedule is helping to restore confidence in the outlook for the economic recovery. Both the euro and the US dollar have struggled against the pound as a result of improved sentiment. Much of Europe is faced with a resurgence of the infection and death rate, and a significant lag in the roll-out of the vaccine. Also giving sterling a boost are market expectations that the Bank of England will be less dovish, at least relative to the European Central Bank. Currency strategists do note that a few risks remain, however, notably the threat of tariffs if the UK government fails to abide by EU labor rules, and the referendum for Scottish independence.
In London trading as of 11:19 am, the EUR/GBP was trading lower at 0.8799 pence, down 0.2958%; the pair has ranged from 0.87948 pence to 0.88363 pence in this session. The GBP/USD was trading at $1.3677, a gain of 0.0827%, off the session peak of $1.37112 while the low was recorded at $1.36555. The GBP/JPY was higher at 143.5500 yen, a gain of 0.1046%, with the high recorded at 143.794 yen and the low at 143.2200 yen.
Euro Struggles for Traction as Outlook Dims
The euro is struggling for traction and hit a 7-week trough against the greenback on expectations of extended lockdowns and quarantine restrictions. The latest economic data from Germany supports concerns for the possibility that the first quarter is likely to show a double-dip recession for the EU as a whole. Yesterday, Germany's statistics bureau reported that retail sales for December, on a month-on-month basis, plunged with a reading of -9.6% against a forecast of a decline to -2.3%. As the largest economy in the Eurozone, analysts say that the struggle in the services sector across the EU may be seen in the upcoming PMI data, which data will be released tomorrow. The EUR/USD was trading at $1.2033, down 0.2487%, off the session low of $1.20316.