LONDON, Feb 9 Reuters Sterling hit its highest level against the dollar since April 2018 and traded just below eightmonth highs against the euro on Tuesday, with analysts citing Britains lead in COVID19 vaccinations as a positive for the currency.
The pound hit 1.3788 against the dollar in early London deals, its highest level against the greenback since Apr. 30, 2018. Against the euro, it traded down 0.15 at 87.80 pence by 0902 GMT.
Analysts have largely been constructive on the pound particularly against the euro this year, noting that Britains COVID19 vaccine rollout has been swifter in comparison to Europe.
Helping the pound broadly has also been the Bank of England, which at its meeting last week pushed back at market expectations of negative interest rates. Money markets do not reflect negative rates from the Bank at least as far out as August 2022.
As we have been arguing since last weeks Bank of England meeting, the move lower in EURGBP seems to have taken a breather, something we expect will continue nearterm, said Kristoffer Kjær Lomholt, Chief Analyst, FX and Rates Strategy at Danske Bank, having noted that last week eurosterling breached key technical levels in the wake of the Banks meeting.
We still like being short EURGBP, as we expect the UK economy to outperform supported by much faster vaccinations.
ING said in a note that a bearish bias on the eurosterling pair is still warranted, given the difference in the pace of vaccinations between…