Matt Hancock grilled by Nick Ferrari on ‘drop’ in administered vaccines
Shortly after the markets opened this morning, sterling was down 0.1 percent against the euro at 86.81 pence. The currency has fallen 2.1 percent in total this week, leaving it on course for its biggest weekly fall in seven months. Against the US dollar, the pound plunged 0.3 percent to $1.3697, set for its biggest weekly drop against the currency since December 2020.
However, sterling has mounted a mini fightback as the morning progresses, and just broke positive territory at 10.30am – up 0.05 percent against the euro at €1.1528.
The currency also increased slightly against the dollar to $1.3709, but was still down 0.18 percent for the day.
The pound enjoyed its best quarter against the euro since 2015 during the first three months of this year.
This upward trend was driven by Britain’s rapid rollout of Covid vaccines, as well as fading of negative rates expectations for the country.
The pound is on course for its biggest weekly fall since September 2020
Sterling has been plummeting against both the euro and US dollar
But that has reversed sharply this week, with Friday marking the fourth successive day the pound has fallen against the euro.
Britain has got off to a tremendous start with its vaccine rollout programme, surging ahead of the rest of Europe, with almost half of the population receiving a first dose.
But increasing supply issues from the Oxford/AstraZeneca jab have seen progress slow over recent days.
George Vessey, UK Currency Strategist at Western Union Business Solutions, said: “There are a combination of factors behind sterling’s biggest drop against the Euro since September and it hitting a 9-week low against the USD after falling below $1.37.
The pound is on course for a disappointing week
“One is the hiccup in the UK’s vaccination rollout stemming from the UK medical regulator’s decision to restrict the distribution of the country’s AstraZeneca vaccine coinciding with multiple EU countries recording a fresh daily record of vaccinations on Wednesday, signalling to markets that a strong vaccine-induced rebound lies ahead.
“Sterling was a beneficiary through January, February and March of the UK’s rapid vaccine rollout, which contrasted most strikingly with a tepid rollout in the EU. Signs that this differential with Europe is now closing is therefore offering the Euro fresh support at Sterling’s expense.
“Most concerning though is the escalating violence that recalls the bloodshed seen before the peace deal with post-Brexit trade barriers fuelling pro-British unionists’ anger.
“Despite the appeals for calm from the Irish and British governments and The White House, clashes spread further into Irish nationalist areas.
Chancellor Rishi Sunak is trying to guide the UK economy through the Covid pandemic
AstraZeneca’s vaccine has been at the centre of a war of words between the UK and EU
“Critics of the departure deal’s Northern Ireland Protocol say a border is now in effect in the Irish Sea, leaving unionists feeling betrayed by London after UK’s Prime Minister Boris Johnson promised there would be no hard border.
“Looking ahead, sterling’s decline comes just weeks ahead of crucial Scottish parliamentary elections that are expected to result in a big win for pro-independence parties.”
Marshall Gittler, head of investment research at BDSwiss, wrote in a note to clients: “The selling of sterling may have been connected to buying of euros.
“It looks like perhaps people are getting more optimistic about the rollout of a vaccine in the EU and less optimistic about the comparable move in the UK.”
The UK got off to a flying start with its Covid vaccination programme
However, some financial analysts continue to remain upbeat around the prospects of the pound over the coming months.
UniCredit strategists wrote in a note to clients: “GBP may further weaken, given lingering concerns about vaccinations, but we still see the ongoing GBP-USD retreat to 1.37 as a buying-on-dips opportunity over the medium term.”
ING also said increasing pressure between the euro and pound “may have run its course ahead of 0.87” and still forecasts both currencies reaching 0.85 later in this current quarter.
The fall in the pound comes after it was revealed AstraZeneca will hand over all of its vaccines made in the Netherlands to the EU – despite the UK having a claim to the doses.
EU vaccine tsar Thierry Breton said the firm has agreed to send six million doses to the bloc every month from its Halix plant in Leiden.
This factory has been at the centre of a vaccine war between Britain and the EU because the UK has a contractual claim to for it to fulfil orders of the Oxford-produced jab
Downing Street had offered to share production capacity at the facility with Brussels.
But Mr Breton has now confirmed AstraZeneca CEO Pascal Soriot had acknowledged all but one batch made at the plant will be sent to EU member states.
This is a breaking story. More to follow…