Pound Sterling Drops against Euro and Dollar, Could Vaccine Rollout Woes be Responsible?
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- Market rates at publication: GBP/EUR: 1.1556 | GBP/USD: 1.3740
- Bank transfer rates: 1.1330 | 1.3455
- Specialist transfer rates: 1.1475 | 1.3644
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The British Pound is on course for a second consecutive daily decline of over half a percent against the Euro, a run of losses not seen since December 2020, with similar declines being experienced against the Dollar.
Unless the Pound can pick itself up and limit Wednesday's losses ahead of the daily close the technical outlook is on course for a notable deterioration that could mark a turn in trend.
A suspected fundamental driver for the losses could be an impending loss of momentum in the UK's vaccine rollout programme which has been credited over recent weeks for Sterling's stellar 2021.
The Pound-to-Euro exchange rate (GBP/EUR) fell a further 0.65% to quote at 1.1564 at this article's most recent update on Wed. 07, levels last seen on March 05.
EUR/GBP was quoted at 0.8647.
The Pound-to-Dollar exchange rate (GBP/USD) was quoted at 1.3755, which places it at levels last seen on April 01.
"GBP/USD's quick re-loss of last week's pivotal 1.3800 level is concerning here. Let's see if 1.3740-70 support zone," says Erik Bregar, Head of FX Strategy at Exchange Bank of Canada. "The momentum is not good."
The UK's medical regulator on Wednesday issued a temporary ban on the AstraZeneca vaccine for the below 30 age group, the latest in a series of disappointments to befall the country's vaccination programme.
Leaked data suggests the AstraZeneca vaccine is to make up three-quarters of the UK's foreseeable supplies with some commentators suggesting the country's vaccination drive could effectively grind to a halt and delay the government's plans to unlock the country.
Expectations that a rapid vaccination programme would lead to a sustained unlocking of the country economy prompted investors to pick up Sterling, particularly against the Euro.
But with the vaccination drive now slowing it could be that the bullish case for Sterling is being questioned by investors.
"There doesn’t seem to be that many positives left for the GBP, especially if one looks beyond the positive seasonal effect in April. Indeed, the slowing pace of the Covid vaccinations in the UK could ultimately delay the government’s plans to reopen economy despite the recent proclamations of PM Johnson," says Valentin Marinov, an analyst at Crédit Agricole.
Both the European and UK regulators have carried out reviews into reports of rare brain clots in people who have had the vaccine, with the EU regulator the EMA confirming on Wednesday that the vaccine should continue being used.
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But in the UK, the 21-30 age group are to now be offered an alternative to the AstraZeneca vaccine due to the evidence linking it to rare blood clots, the UK's vaccine advisory body the MHRA said.
The regulator said this was still not proof the jab had caused the clots although a connection was becoming clearer.
The regulator said the side-effects were extremely rare and the vaccine's effectiveness was proven.
It said it meant the benefits of taking the vaccine were still very favourable for the vast majority.
The UK has already witnessed a sharp slowdown in its vaccine delivery schedule over the Easter weekend, but a lacklustre rate of vaccinations on Tuesday confirms a more structural issue.
The UK government warned in March that the programme would slow in April due to supply disruptions, with the halting of a planned shipment of 5 million doses from India being seen as the main cause of the blockage.
However, a two-week early delivery of Moderna vaccines and expectations for Novavax supplies to come on line in May could yet deliver the achievement of the government's targets of offering a vaccine to all adults by July.
"The effect on the timing of our overall programme should be zero, or negligible," said England's Deputy Chief Medical Officer Jonathan Van-Tam.
