LONDON (Reuters) – Sterling won against a much weaker euro on Friday, making up for some of the losses it suffered against the split currency as the new year began, although it was still on the way to the weekend in red.
Rising market prices of negative interest rates from the Bank of England following new lock-in measures in Britain to counter the crown’s rejection of the pound’s rejection, lamenting gains made after the Brexit deal agreed at the end of last year.
Markets are pricing sub-zero rates from the British central bank as early as May 2021.
(Graphic: Money markets price negative rates from BOE as early as May 2021 🙂
Analysts warn that this will hamper the gains of sterling against the euro.
“Euro-sterling remains above the 0.90 (pence) level as the rise in rate cut expectations (after the third lock) is having a positive effect on the UK-EU trade deal,” said strategists at ING Bank in a note to clients. .
“While we still see room for the euro-sterling to fall below the 0.9000 level, this should be limited by the increased risk of the Bank of England easing, while in which sterling is to benefit less from a conducive global risk environment compared to its Europe. cycling counterparts such as the Swedish krona or the Norwegian krone. “
Sterling gained as much as half a percent against the euro to 89.98 pence in early trading in London.
It was 0.1% higher to the dollar at $ 1.3579.
Sterling 2021 started at the highest levels against the dollar since May 2018 after Britain secured a last-minute trade deal with the EU. These benefits have grown rapidly as Britain intervenes with rising cases of COVID-19 amid the discovery of a new strain of the virus.
The British economy is also beginning to feel the effects of life outside the EU: more than 50 British retailers, including Tesco and Marks & Spencer, are opposed to potential taxes for re-exporting goods to the European Union, their trade body said, among these warnings Britain could be so competitive.
A Deloitte study showed a wave of optimism swept over the heads of major British companies in December, ahead of tightening of COVID-19 restrictions this month, even though many thought it would take a long time to overcome the pandemic.
However, half of respondents said it would take at least the end of 2021 before revenues return to their pre-release levels – revolving around a Bank of England survey published this week .
The British labor market strengthened for the first time in three months in December, before closing again this month, with a rise in permanent employment and a small increase in the number of vacancies, a monthly survey of employers showed .
Reciting with Ritvik Carvalho; Edited by Kim Coghill