The pound managed to gain some leverage as the Bank of England dismisses forecasts on negative interest rates.
Similarly, the United Kingdom’s lead on vaccination ignites investors’ support for the sterling.
In the morning trade, GBP USD edged up 0.1% higher to $1.3657, only a little below $1.3701 notched earlier in the week.
Meanwhile, the sterling also hiked by 0.1% against the euro at 89.0.25 pence. It went past the highest settlement since December 24 at 88.84 pence.
With the turnout of events, analysts noted that the central bank’s re-pricing ignited a downward momentum.
Market spectators expect the pair to test 89 pence support in today’s trading session.
Earlier in the week, the Bank of England’s Governor dismissed expectations on negative interest rates.
Before this, analysts noted that the United Kingdom might resort to adopting the mechanism to keep its struggling economy afloat.
So far in the week, the sterling pound gained 1% and 1.5% against the USD and euro, respectively, buoyed by BoE’s statement.
This is due to the adjustment in market pricing, with sub-zero rates now expected to take place in June this year from the initial expectation in May.
According to a chief analyst, the United Kingdom’s leading initiatives on the vaccination process is a good case for a stronger sterling.
This will especially be enjoyed in the market when the resolution for nearer-term adjustment problems on the new EU-UK trade relationship takes place.
Analysts are currently keeping close monitoring on the performance of the UK’s economy now that the Brexit uncertainty starts to completely wear off.
Meanwhile, the country remains under pressure due to the rising number of coronavirus cases despite the presence of inoculation.
The Dollar Edged Lower
In the United States, the dollar tumbled conservatively during the day as Biden reportedly plans to exhaust $2 trillion in stimulus initiative.
The USD index, tracking the performance of the greenback against other entities in the basket, fell by 0.04% to 90.302.
Nevertheless, it is still above the 90-point threshold after falling to multi-year lows earlier in the year.
The USD JPY pair is back at 104 points after adding 0.1% while the risk-sensitive Aussie hiked by 0.3% to 0.7756.
In the old continent, the EUR/USD tumbled by 0.1% to 1.2155 in the latest foreign exchange charts.
The dollar has risen in the last five trading sessions as US Treasury yields surge past 1% for the first time since March last year.
- Trading Instrument