Sterling ended a choppy day back where it started yesterday against EUR after strengthening by nearly half a cent in early trading, falling significantly and then recovering. The pattern was similar against USD.
So far this morning sterling has weakened by around 0.5%.
A front-page report in yesterday’s Times newspaper claimed that sterling had been “left vulnerable” as its current strength is largely based on a surge in foreign holdings, which rose to nearly £100bn over the 18 months the end of 2020. The last time this happened was in summer 2008, shortly before sterling fell by 25% against USD.
Other reports suggest that sterling has taken all the advantage it is going to from the faster vaccine rollout and Brexit deal and needs fresh impetus.
In the meantime, the UK’s continued success was on vaccines and falling infection rates was highlighted by BoE governor Andrew Bailey in a BBC interview. He seemed unworried by the threat of inflation later in the year and said that models predicted a return to the GDP levels last seen in late 2019 by the year end.
