By Matthew Boyle
The end of last week saw GBP>USD rates hit a 3 year high- welcome news for any buyers of the Greenback. GBP>EUR rates however have remained more stagnant despite many analysts suggesting we were set to see a run following the recent easing of restrictions in the UK. It seems now that following the recent development in the UK and announcement of the Indian covid variant that markets are waiting to see how this plays out.
Whilst recent reports suggested the new strain was unlikely to alter the UK’s roadmap and restrictions would be fully lifted on June 21st , concerns are now mounting given the rise in numbers seen and over increasing transmission under current easier rules.
Whilst rates are rising sharply, hospitalisations don’t seem to be at present – the main factor in determining the government’s approach to lockdown.
Some suggest this is due to the success of the UK vaccination programme, however, there is uncertainty as to whether vaccines provide any significant cover to this new strain and as such others suggest it is purely a matter of time before we see it take hold and hospitals burdened once again.
So in the short term Covid will again play a huge role in determining what GBP rates do, with everyone watching closely to see what will happen regarding June 21st.
As such expect rates to remain relatively flat until some clarity emerges here.
With GBP>EUR rates a cent off the best they have been in over a year and GBP>USD the best on 3 years it might be wise to take advantage now.
Should this new variant take hold and June 21st is pushed back or worse we see the current easing reversed we would quickly see the Pound suffer and rates drop.
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