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Copyright © 2021 Kalkine Media Pty Ltd.
Summary
- The Great British Pound (GBP) displayed a positive trend amid the US dollar uncertainty, with speculators raising bets for a GBP upside.
- GBP has been able to put up a good show thanks to UK’s vaccination drive and BoE’s ruling out the possibility of negative interest rate and a rise in inflation in the short-term.
Investors are ramping up their bets for more pound sterling upside against the Euro and the US dollar. The weekly net 'long' position on the Great British Pound stood at $3.147BN, up 16 per cent and most bullish in past three years, as per the latest report from the Committment of Traders. Analysts said that a long position could mean that the market was in aggregate betting for GBP gains.
During April 2018, the GBP/USD rate had peaked at 1.43 before continuously falling for the next four months. Analysts also say that the completion of an EU (European Union) -UK trade deal early this year helped strengthen the sterling against the euro.
At the time of writing (9 March, 2.11 PM), the market exchange rates were GBP/EUR at 1.17 and GBP/USD at 1.39.
Copyright © 2021 Kalkine Media Pty Ltd.
Also Read: FTSE 100 Leaps in Green as GBP Slips Below 1.38 Vs USD
Where will GBP/USD settle?
Bulls are eying a value of 1.3950, after which, the momentum could turn positive according to currency analysts. Yet another view suggests that this could be unlikely as the US President Joe Biden’s fiscal stimulus could send the dollar back up. The US House of Representatives will be passing the Senate's version of the US $1.9 trillion coronavirus relief bill this week.
GBP has been able to put up a good show thanks to UK’s vaccination drive. Over 22 million people have already received their first COVID-19 vaccine shot in the UK. The quick paced inoculation programme is expected to push up the economic recovery across the nation.
Bailey’s optimism
There were assuring comments from Andrew Bailey, Governor, Bank of England that negative rates were not on the agenda as of now. In a speech delivered to the economic think tank Resolution Foundation, Bailey shared cautious optimism for the UK economic recovery after the pandemic. He said that any rapid jump in inflation was not expected, which is considered as a market risk by few investors.
Moreover, an improvement seen in a recent British Retail Consortium (BRC) survey also marginally lifted up the pound sterling. BRC's measure of consumer spending at the top UK retail chains rose by 1 per cent in February 2021 compared with the same month previous year.
