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Sterling steady amid doubts over June 21 reopening

Sterling holds firm after UK COVID-19 infections drop
Sterling holds firm after UK COVID-19 infections drop   -   Copyright  Thomson Reuters 2021
By Reuters

By Lawrence White

LONDON – Sterling held flat against a resurgent U.S. dollar on Monday, despite doubts as to whether Britain’s government will stick to its plan to fully lift COVID-19 lockdown restrictions in England on June 21.

Sterling has been among the top-performing G10 currencies this year as Britain’s efficient deployment of vaccines spurred expectations of a fast reopening of the economy.

Those hopes have faded somewhat in recent weeks however, as rising cases of the Delta variant of COVID-19 first detected in India have led to calls from some scientists to push back the reopening date.

Health minister Matt Hancock said on Sunday it was “too soon” to say whether the June 21 plan could go ahead.

By 1442 GMT, the pound was up slightly against the dollar on the day at $1.4183, and down slightly against the euro at 85.97 pence..

The pound had recovered from a bad recent run against the surging dollar at the end of last week, thanks to softer than expected U.S. jobs data on Friday which knocked the greenback from its perch.

The jobs data was seen as a relief for markets because it showed a pick-up in job growth was not strong enough to raise expectations for the U.S. Federal Reserve to tighten its monetary policy any sooner, hurting the dollar.

Speculators decreased their net short dollar positions last week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

Britain has emerged as a frontrunner in the global race to hike central bank interest rates and end years of easing, as the speed of its economic recovery has investors speculating the Bank of England could tighten before the United States and Europe.