Pound set to plummet to biggest loss in seven months as fears grow over AstraZeneca supply

Pound set to plummet to biggest loss in seven months as fears grow over AstraZeneca supply

At 7.49am, 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 fall since December 2020.

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.

But that has reversed sharply this week, with Friday marking the fourth successive day the pound has fallen against the euro.

Market participants have said this has been amplified by a squeeze of euro-pound short positions.

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.

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.”

However, 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”.

The Dutch banking giant still forecasts both currencies reaching 0.85 later in this current quarter.

This is a breaking story. More to follow…

Published at Fri, 09 Apr 2021 09:17:00 +0000