Over the last week Pound Sterling exchange rates have been comfortably moving higher- albeit at a slow pace (Which in my opinion is a solid proof of trend confirmation)- predominantly against the Dollar and Euro. As I have written in previous articles- the main reason for Sterling strength currently is solely down to the vaccine rollout in the UK- for a solid month we have seen the rollout numbers continue to go from strength to strength, which is not only filling the British public with hope, but investors as well.

I am expecting Sterling to outperform the Euro in the short term due to issues with vaccine rollouts across Europe- We did see the Pound drop off slightly on Friday- but overall we saw a pretty good week of gains for Sterling.

The UK Vaccine rollout should not be affected by a recent EU rule that threatened to block vaccine exports- it seems that fulfilment of existing contractual obligations will still be met, it may just be future ones that are affected. Right now it seems that the EU’s approach tot he vaccination rollout may keep the Euro slightly weaker in the short term until their rollout gains momentum. The EU has had many setbacks in it’s vaccination effort and this will mean a slower reopening and slower economic recovery- which will reflect in the Euro.

My main concern for this week for Sterling is the BoE interest rate decision on Thursday- we are not expecting any rate cuts as it makes sense that the BoE would keep monetary policy the same prior to the March budget- as I expect they are relying upon the vaccine rollout before making any judgement calls on the UK economy. In January, BoE Governor Bailey indicated that he isn’t keen on the idea of negative interest rates- but if he mentions that there is still a possibility of it happening, this could cap Sterling’s gains for the week, but if he reiterates his stance from January- then Sterling rates could rise pretty quickly- so I do expect the markets to be volatile on this day.

Other than what I have mentioned above- the main talk in the markets has been the $GME saga in the stock market- David Belle has written a good piece if you are interested in the why and how of it happening- https://www.macrodesiac.com/should-retail-have-the-options/

As always- I hope you and your families are all keeping well, our spirits must remain high, vaccine rollouts are and will gather momentum through February, and as each day passes, we are one day closer to the end of this.