* Graphic: Global FX rates in 2020 tmsnrt.rs/2egbfVh
* Graphic: Sterling with trade pressure from Brexit vote tmsnrt.rs/2hwV9Hv (Prices updating, adding to report)
LONDON, February 12 (Reuters) – The pound fell below $ 1.38 against the dollar but remained stable against the euro on Friday, as currency traders focused on data showing that the economy UK in the last quarter of 2020, even though it had its biggest annual decline in 300 years.
The British economy traveled 9.9% in 2020, the largest annual decline in output in more than 300 years. But he avoided a return to decline in the last quarter and is likely to recover in 2021.
The pound has been strengthened since the start of the year by the UK ‘s relative success in delivering COVID – 19 vaccines, as well as relief that the last – minute Brexit deal was reached in late 2020.
It peaked at a three-year high of $ 1.3865 on Wednesday. On Friday, it eased those highs, down 0.2% against a stronger dollar at $ 1.3785 at 1207 GMT. Against the euro it has not changed much at 87.82 pence per euro.
“While the market continues to make new highs, we expect the reversals to be bought in,” said Joe Tuckey, FX analyst at Argentex. “We saw a lot of sterling tails.”
Tuckey said cable is expected to test the $ 1.40 level before the end of the first quarter, citing vaccine progress as a key driver that could accelerate the UK’s exit from the tight lock which would give the economy a boost.
“We’re running on, so I think that will help a lot – that will come through in the data if we’re ahead of the game, maybe going into Q2,” he said.
Some 13.5 million people in the UK had received their first dose of vaccine as Wednesday, the government said. Prime Minister Boris Johnson has said he will announce details of the UK lock-in discount program on 22 February.
Elsewhere, Britain and the European Union on Thursday reaffirmed their commitment to resolving post-Brexit trade problems across the Northern Ireland border.
Britain’s exit from the EU’s trade orbit in January has severely strained trade between Northern Ireland and the rest of the UK, underscoring relations as London and Brussels are jointly responsible for the problem.
“At the moment, the deteriorating relationship has had little effect on the financial market, but there are clear risks that it could escalate and become a financial market issue – certainly a the recent uptrend for the pound could be halted, ”said MUFG head of research Derek Halpenny wrote in a note to delegates.
“We are maintaining our GBP positive outlook for now but we will be keeping a close eye on how this consultation period progresses in the coming days,” he said.
Reporting by Elizabeth Howcroft; edited by Nick Macfie, Larry King