Earlier this week Sajid Javid spoke firmly on lifting restrictions on July 19, despite the growing number of cases.
The news did little to boost morale, however, for the pound sterling, which continued to lose ground against the US dollar for a fourth day in a row. One factor is the uncertainty surrounding the delta variant and its ability to resist vaccines. Until it is clear that it is robust enough to do so without putting undue pressure on the NHS, the pound is unlikely to continue its recent run.
In the medium and short term, however, there is hope against the euro. Markets are starting to pay more and more attention to central bank policy when it comes to raising interest rates. Whoever moves first could see their currency skyrocket, due to the increase in foreign investment funds seeking higher returns.
Considering that the ECB is expected to be furthest from such a rise (expected in 2024 at the earliest, vs Bank of England in 2022), this could mean the pound is better supported against the single currency.
Have a nice day.
Thomas De Caluwé, Relations Officer.
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