Pound soars to multi-year highs on hopes for a strong UK economic rebound

Currencies DirectStaying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

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The pound has steadily advanced over the past couple of weeks, propelling GBP exchange rates to new highs.
During this period, we’ve seen GBP/EUR climb from €1.13 to €1.15 whilst EUR/GBP has stumbled back to £0.86.
Meanwhile, GBP/USD has surged over $1.40 to close in on a new three-year high, while EUR/USD has traded around $1.21.

What’s been happening?

The pound has enjoyed considerable support throughout February, amidst growing hopes for a swift reopening and sharp economic recovery in the UK this year.
This has been underpinned by the UK’s enviable success in its vaccination rollout, as well as some encouraging coronavirus statistics pointing to a sharp drop-off in new cases and hospitalisations in recent weeks.
The euro, meanwhile, continues to struggle to find any lasting gains as the EU’s slow vaccine rollout has undermined recent positive EUR data releases.
At the same time, the US dollar has largely tracked the trajectory of US Treasury yields over the past couple of weeks, resulting in some volatility in the ‘Greenback’ as bond yields fluctuated in response to some mixed US data.

What do you need to look out for?

Looking ahead, the pound is well positioned to extend its bullish run, so long as the UK moves forward with plans to open back up, with GBP investors also keeping an eye out for Chancellor Rishi Sunak’s March budget.
The euro could continue to face headwinds in the next couple of weeks, so long as the EU’s vaccination drive continues to lag behind its peers.
Meanwhile, for the US dollar, much will depend on how much of President Biden’s $1.9bn stimulus package is actually passed into law, and whether it will be enough to convince USD investors that we can expect a strong US economic recovery in 2021.

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