Friday 9th April 2021 - 07:37 (BST)
The pound lost nearly 3.5% against the US dollar and 1.6% against the euro in recent weeks as pressure mounts on the UK’s coronavirus vaccination drive. Concerns over the safety of one of the main vaccination jabs provided by Oxford AstraZeneca has led many investors to move away from GBP in the short-term.
There have been suggestions that the recently developed vaccine can develop rare blood clots in patients, leading many European countries banning it entirely whilst the UK begins to offer alternatives to the under 30’s. This has raised the likelihood of many people refusing the Oxford vaccine and creating potential shortages of the Pfizer/ BioNTech and Moderna variants.
The knock-on effect could lead to delays in the current roadmap for reopening most parts of the UK economy by late May and would likely see the recent GBP strength subside further. However, Prime Minister Boris Johnson recently confirmed that "stage two" of lifting lockdown would take place next week whilst simultaneously announcing the launch of a new mass testing programme, aimed at helping health officials to track the pandemic.
There was a slight stemming of movement lower for sterling following the PM's announcement, slowed further in recent days as readings showed the UK service sector returned to growth over March whilst construction output expanded at its fastest pace since September 2014.
Key resistance levels are also being tested with GBP/EUR falling below €1.15 whilst GBP/USD looks increasingly likely to reach $1.3650 ahead of todays quarterly bulletin from the Bank of England - especially if the central bank strikes a dovish tone during its commentary of the UK’s economic performance over the early part of 2021.
