Sterling edges higher as Britain gets ready for April re-opening

Sterling edged higher against the dollar and the euro on Wednesday as traders look past economic data in Britain and focused on a planned April re-opening of shops in England. Data showed that Britain's economy grew faster than previously thought in the final three months of last year, with gross domestic product rising 1.3% from the previous quarter.

Reuters | London | Updated: 31-03-2021 16:55 IST | Created: 31-03-2021 16:53 IST
Sterling edges higher as Britain gets ready for April re-opening
Representative Image Image Credit: Pixabay

Sterling edged higher against the dollar and the euro on Wednesday as traders look past economic data in Britain and focused on a planned April re-opening of shops in England.

Data showed that Britain's economy grew faster than previously thought in the final three months of last year, with gross domestic product rising 1.3% from the previous quarter. It still shrank by the most in more than three centuries in 2020. Mortgage lender Nationwide said British house prices grew less than expected in March. House prices fell by a monthly 0.2%, slowing the pace of their annual increase to 5.7% from 6.9% in March.

Traders looked past the weak numbers as "these data points won't be reflective of conditions in the UK economy soon as the stages of re-opening start to elapse," said Simon Harvey, senior FX Market Analyst at Monex Europe in London. Lockdown restrictions are gradually being lifted in England, with more substantial changes, including the re-opening of non-essential retail and outdoor hospitality settings, set to take place on April 12.

Sterling edged up 0.2% to $1.3772 at 1107 GMT versus the dollar, which rose to multi-month peaks versus other currencies this week amid U.S. generous fiscal stimulus and speedy vaccinations. After rising above $1.42 in February to its highest level against the dollar since April 2018, sterling lost some ground versus the dollar in March.

Monex's Harvey said cable currently looks cheap, "given what could be in store next month for the UK economy". Versus the euro, sterling was on track to its sixth consecutive monthly gain. It was 0.1% higher at 85.20 pence against the single currency.

The British currency has gained 4.5% against the euro so far this year, with analysts attributing the move largely to the pace of the UK's vaccine rollout, while Europe's vaccination program has lagged behind and COVID cases are rising. "If things carry on the way they are now, I think we could see EURGBP trading around 83.00 pence by the end of the year," said Stuart Cole, chief macro strategist at Equiti Capital in London.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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