Pound above $1.39 on optimistic outlook for UK economy
The pound has risen again today following news that the vaccine roll-out is surpassing expectations, in addition to a weak US dollar.
For the first time since April 2018, the pound is valued at $1.39, as optimism over a global recovery lifted the FTSE 100.
The pound has strengthened since December when the UK and EU put pen to paper on a trade deal.
This was compounded more recently as the UK shared positive news around its vaccination efforts.
Now up to 15m people have received a vaccination, while the total number of cases has reached 4m.
Russ Mould, investment director at AJ Bell, feels lowered expectations have caused markets to react positively to the news.
“Government attempts to manage expectations on Covid better are helpful to the market which is now probably pleasantly surprised at just how quickly the UK has vaccinated the most vulnerable sections of its population,” Mould said.
Milan Cutkovic, market analyst at Axi, expects the pound to continue its momentum over the coming weeks.
“The British Pound is set to extend its winning streak in the near-term, as the successful vaccination campaign could give the UK a major advantage,” said Cutkovic.
“The currency is likely to test the 1.40 level against the US dollar soon and gain further ground against the Euro.”
The pound is now at 1.46 against the euro, its highest point since May 2020.
A report by the Bank of England has suggested UK GDP will recover towards pre-Covid levels during the coming year.
“GDP is projected to recover rapidly towards pre-COVID levels over 2021, as the vaccination programme is assumed to lead to an easing of COVID-related restrictions and people’s health concerns,” the report said.
The Bank of England predicts growth of 7.25% during 2022, up from a previously forecast 6.25%.
