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Pound attempting to overtake Euro

24 May 2021

The Euro’s region has had an improving economic outlook recently making it harder for the UK currency to advance against it. However, the Pound Sterling is still expected to increase in value over coming days. During the past month, the Sterling was the second-best performing major currency, with the Canadian Dollar taking the top spot. The British currency was mainly boosted by the country’s rapid rebound from COVID-19 restrictions. 

Traders and analysts are looking at June 21st, which is when the UK Government planned to lift all of the COVID-19 restrictions. However, due to the number of cases of the Indian variant in the UK, the Government is set to reconsider the date. Current positive investor sentiment underpinning UK assets would be boosted by the easing of measures as well as the economic activity. 

A report published by the Public Health England (PHE) noted that the major vaccines being administered in the UK are effective against the variant. Dr Mary Ramsay, Head of Immunisation at PHE said, “This study provides reassurance that 2 doses of either vaccine offer high levels of protection against symptomatic disease from the B.1.617.2 variant. We expect the vaccines to be even more effective at preventing hospitalisation and death."

At the start of the week, the GBP/EUR was trading at 1.1613 whilst the GBP/USD trades at 1.4153. Petr Krpata, Chief EMEA FX and IR Strategist at ING Bank said, "The strong UK May PMIs have underlined the optimistic case for the UK economic outlook, and it is a clear tailwind for GBP.”