UK's vaccine campaign gaining momentum; USD likely to remain weighed by new policies.
In London trading, the British pound struck a 2½ year peak versus the US dollar, as well as an 8-month peak against the euro. Analysts say that investor hopes have driven the pound higher, largely on expectations that the government's rapid-fire efforts to ensure full vaccination of its citizens will result in a quicker rebound of the country's economic growth. The British government is moving at a faster pace than many of its European rivals, leading to the belief that, as a whole, Britain will be able to put the worry of the coronavirus to bed before its neighbors. The pound is also supported by the absence of concern for a negative rate environment; members of the Bank of England's governing council recently dismissed that concept, at least for the next several months.
In London, as of 10:57 am, the GBP/USD was trading at $1.3727, a gain of 0.5273% and sliding away from the session peak of $1.37465, while the low was recorded at $1.36471. The EUR/GBP was lower at 0.8840 pence, down 0.2842%; the pair has ranged from 0.88292 pence to 0.88743 pence in this session. The GBP/JPY was higher at 141.988 yen, a gain of 0.4165%, off the session peak of 142.214 yen.
Dollar Likely to Remain Weighed by New Policy
In the US, the greenback is being weighed by expectations of a near-immediate move by the new Biden administration to enact a major stimulus program for struggling industries and citizens. Yesterday, Joe Biden and Kamala Harris were sworn in as the president and vice-president in a more demure ceremony than normal, given the still raging pandemic. A continuing ultra-loose monetary policy, coupled with a massive injection of cash through fiscal policy, is likely to keep the US dollar weighed for many months to come, says currency strategists. The EUR/USD was trading higher at $1.2139, a gain of 0.2436%, while the USD/JPY was lower at 103.4200 yen.