Currency Note

Pound regains strength as EU reject vaccine export ban

By Christopher Nye March 26th, 2021

The pound has strengthened against both the euro and the dollar this morning after a period of weakness over the last couple of days.

UK retail sales saw slower growth and recovery in February than in January, with clothing stores being among the worst affected by lockdown.

EU leaders rejected the proposed vaccine export ban and instead indicated their intent to honour delivery contracts. The euro has regained a little strength against the dollar but continues to feel the effects of slow vaccinations and rising covid infections.

In the US, the job market appears to be recovering after initial jobless claim figures were the lowest since the start of the pandemic.

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GBP: Pound climbs back

The pound has regained some strength against the euro and the dollar despite some concerns over supplies of the covid-19 vaccine to the UK.

After rumours that vaccine passports would be required to visit venues such as pubs, Prime Minister Boris Johnson has said that no decisions have been made yet, and vaccine passports would only be viable “when everybody had been offered a vaccine”.

CBI Distributive Trades figures, which measure the health of the retail sector, stayed the same month-on-month, with clothing, footwear and furniture being the hardest hit sectors.

Retail sales saw a slower recovery last month than in January, with sales volumes rising 2.1%. Online shopping accounted for a large proportion of sales.

GBP/USD chart

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EUR: EU leaders refuse vaccine export bans

The euro has strengthened slightly against the dollar, after hitting a four-month low against the greenback yesterday. The single currency is still, however, feeling the effects of slow vaccinations and a recent surge in cases.

Yesterday, the bloc asked for approval from European leaders on a vaccine export ban to countries that were ahead with vaccinations, such as the UK. Leaders refused the ban and instead chose to support “global value chains” and to “respect contractual delivery deadlines”.

Spain has been hit hard by the pandemic, with data showing that the country’s economy shrank by 8.9% year-on-year in Q4 of 2020, and saw zero growth between October and December. Next week we will see data releases for consumer confidence in the Eurozone.

USD: US job market recovering

The dollar has lost some of its strength this morning as the euro shows a slight recovery.

The US economy grew by 4.3% year-on-year in the final quarter of 2020 – a bigger increase than markets had anticipated. However, looking at 2020 as a whole, the economy shrank to levels not seen since 1946.

US jobless claims fell to their lowest numbers since the start of the pandemic, pointing towards economic recovery.

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