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The pound to euro exchange rate continues to perform well as March enters its second week. This growth started lasted week and could see GBP cross the 1.17 handle once more. Coronavirus has regularly proved a barometer for sterling’s movements over the past year.
In recent weeks, the success of the Covid vaccine has helped boost the pound.
The pound is trading at 1.1675 against the euro, according to Bloomberg at the time of writing.
Michael Brown, currency expert at international payments and foreign exchange firm Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.
“Sterling had another promising day against the common currency yesterday,” said Brown.
“It continued the steady ascent started a week prior and nearing the 1.17 handle once more.
“This, and the recent 1.1705 high, will prove a tough bar for the pound to jump, though the UK’s continued outperformance in Covid vaccinations means we should indeed break these levels in due course.
“Today’s data docket again contains nothing of interest.”
George Vessey, UK Currency Strategist at Western Union Business Solutions, also shared his insight.
“Last week, the British Pound suffered its worst week against the US Dollar this year as the world’s reserve currency gained momentum across the board,” said Vessey.
“Sterling could fall further against the dollar but may climb higher against the Euro in the short term.
“Bank of England Governor Andrew Bailey has so far not intervened in the bond market turmoil despite 10-year UK yields having quadrupled this year.
“Policymakers view it as a natural reaction given the UK’s lead in the global vaccination race, which has also been GBP constructive.”
Vessey added: “GBP/EUR could edge closer towards fresh 13-month highs as Euro demand continues to fade.”
Looking at the week ahead, he said: “On the data-docket this week, Friday is a short-term indicator day – the UK reveals monthly GDP results, industrial & manufacturing production, and the trade account.”
Vessey continued: “Volatility in bond markets has sent shockwaves through equity and FX markets over the past few weeks, but the bond sell-off should be contained with strong verbal reiteration from central bankers in the coming days.
“The successful vaccination story so far, coupled with easing lockdown measures are both boosting inflation expectations as investors bet on pent-up consumer demand driving prices higher during the economic recovery cycle.”
The expert went on: “Long-dated bond yields are rising as a result, in the US especially, which is fuelling more demand for the US Dollar relative to its peers.
“The US Federal Reserve has done little to ease the bond sell-off, but the European Central Bank (ECB) could intervene this week if European yields continue to rise.
“Another round of asset purchases to avoid a sustained tightening in financial conditions could be on the cards, which would likely calm bond markets but also support risk appetite.”
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