- GBP / USD has rallied in recent trading to return above the 1.3700 level from previous lows below 1.3650.
- An improvement in risk appetite helped the pair by pushing down the USD.
He GBP/USD It has rallied in recent trading to come back above the 1.3700 level from previous lows below 1.3650. The pair is now trading with gains of around 0.3% or around 45 pips on the day and the GBP is among the three best performing G10 currencies on the day.
UK basics
In terms of the UK’s national fundamentals, not much has been noticed today. However, GBP is one of the best performing currencies in the G10 (only behind the SEK and NOK). Market commentators are likely to suggest that the continued support for the British pound against its peers is due to the “vaccine trade”; i.e. the notion that given its more efficient mass vaccination efforts, the UK is likely to achieve herd immunity much earlier than the EU and even the US, meaning it can reopen its economy faster and thus enjoy a faster economic recovery.
Keep in mind that EU vaccine protectionism poses a threat to this narrative; angered by production delays at AstraZeneca’s EU vaccine manufacturing facility and angered by the company’s refusal to divert UK-made vaccines to the EU, the bloc threatens to clamp down on exports of vaccines. This could affect Pfizer’s vaccine exports from Belgium to the UK starting this weekend. In the event that EU exports to the UK are blocked, forcing the UK to rely on home-produced vaccines, achieving herd immunity by vaccinating 75% of the population could be delayed by almost two months, according to data analytics firm Airfinity (cited by The Guardian).
The criteria for blocking exports will be published on Friday and the mechanism for actually doing so is expected to come a few days later. This will be a development worth watching for the GBP that could present some downside risks.
Technical levels
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