Pound to Dollar Rate Surpasses 1.39 on Vaccination Hopes
To say the pound is on a run against the dollar would be an understatement. Last week it broke its shackles and advanced above the 1.38 barrier for the first time since April 2018 – and it did not have long to reacquaint itself. By Monday morning it had surpassed 1.39 – a fresh 33-month high – amid vaccine-fuelled optimism that the UK economy will recover strongly once the lockdown is lifted.
The UK is among the world’s leading countries in terms of the pace of its Covid-19 vaccination programme, which began in December. Over the weekend, the UK government met its target of providing 15 million people in the top four priority groups with a first jab by 15 February.
The UK’s vaccine rollout – which is much further advanced than anywhere in Europe – is now being expanded to over-65s and the clinically vulnerable. Assuming it maintains its momentum, expectations of an easing of lockdown restrictions will rise, with the next update on measures due a week today. Prime minister Boris Johnson said there is a need for “progress that is cautious but irreversible” ahead of the decision.
The PM also told reports that “The question is a judgement of how quickly we can do that safely,” adding “These are the judgments that will be made this week and we will talk to everybody who has an input into that debate because it is a very important and fine judgment.”
The only macro data in the economic calendar yesterday was the Rightmove House Price Index, which rose unexpectedly by 0.5% in February – following three consecutive monthly declines.
Risk-on Mood Weighs on Dollar
The pound was also propelled higher by a risk-on mood in markets at the start of the week, which in contrast pinned down the safe-haven dollar. Optimism about Covid-19 vaccine rollouts, and the prospect of a planned $1.9 trillion US stimulus package, pushed investors into riskier assets like the pound and out of the dollar.
Looking Ahead
A quiet start to the week in the economic calendar means investors will be focusing on a raft of data scheduled on both sides of the Atlantic tomorrow. The UK releases its latest inflation and retail data, with lockdown restrictions expected to keep both figures relatively depressed. The headline Consumer Price Index – a key indicator to measure inflation – should remain heavily constrained by energy prices, while post-Christmas retail sales are forecast to fall by 4%.
The US economy is also set to release its latest retail sales figures, together with its Producer Price Index (excluding food and energy). The FOMC minutes from the January meeting will be scrutinised by investors for any insight into committee members’ appetite for the withdrawal of stimulus.
To discuss these upcoming data releases in further detail and their potential impact on pound to dollar exchange rates, you can get in touch using the form below.
The post Pound to Dollar Rate Surpasses 1.39 on Vaccination Hopes appeared first on Pound Sterling Forecast.
Source: https://www.poundsterlingforecast.com/2021/02/pound-to-dollar-rate-surpasses-1-39-on-vaccination-hopes/
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