The euro lost further ground to the pound during early Friday trading, continuing the trend of earlier sessions that has seen the single currency losing more than 1% to sterling since Monday. The relative success of the UK’s vaccine rollout contrasts with the, so far, suboptimal progress of the European program. The slow pace of the vaccine deployment orchestrated by Brussels is triggering fears of a slower than expected economic recovery in the EU, while on the other side of the channel the picture looks rosier, with hopes that Britain may have vaccinated its entire adult population by July. This scenario is, supporting the pound and punishing the euro, especially after the Bank of England indicated yesterday that negative rates won’t be deployed in the short- to medium-term. Meanwhile European economic data, such as German factory orders, point at a double dip recession triggered by the latest wave of lockdowns.
Ricardo Evangelista – Senior Analyst, ActivTrades