Last week was rather uneventful for Sterling as we managed to hold the key 1.14 area against the Euro and 1.38 against the U.S Dollar. So far Sterling strength is playing out as we expected, however it is evident that there are limitations to this particular strength.

The fact remains that the UK’s vaccine strategy is the key reason for strength in the currency at the moment, as the market is making bets on an early and strong reopening in the UK- the date for this will of course be revealed to us soon, but as case numbers are dropping, they are still higher than where the Government wants them to be- so I do not see a decision being rushed on this.

There seems to be rising concerns on the UK/EU Brexit deal on financial services, prior to this week it seemed that it was a given that the UK will be given “Equivalence”- but over the week both Michel Barnier stated concerns about this happening and this was also echoed by BoE Governor Bailey.

Having seen Brexit negotiations over the last 4 years, I am not paying close attention until we get closer to seeing this happen, for now this is all media and headlines, it wouldn’t make sense to me for the EU to not grant the UK equivalence, but the last year has been the year for surprises so I shall not get my hopes up for now!

Apart from the above- there is not much to report for now- the UK awaits the PM’s guidance on the last week of the month and that is when I expect to see the next move for Sterling to happen.

If you have any questions or would like analysis on a particular situation please don’t hesitate to contact me.