GBP/USD rallied sharply in early trading on Monday to its highest levels since April of 2018, reaching above $1.39 and drawing closer to the major psychological level of $1.40. The pair was boosted by a weaker US dollar and optimism over a faster than expected UK economic recovery from the damage caused by the Coronavirus pandemic.
Meanwhile, the safe haven US dollar was pressured as risk appetite inceased, with hopes stoked by news of the COVID-19 vaccine rollout and the $1.9 trillion US stimulus package. The US dollar has also been weighed down by disappointing jobs data. Last week, Jobless Claims came in worse than expected and the Nonfarm Payrolls data for January released earlier this month widely missed analyst expectations.
On Sunday, UK Prime Minister Boris Johnson said the UK had vaccinated more than 15 million people – almost a quarter of the population of 66 million. Details on plans for lifting the lockdown are set to be released later in February. The United Kingdom has suffered a death toll of over 117,000 according to Johns Hopkins University, making it one the countries hardest hit by the pandemic.
Looking at the daily chart above we can see that the pound has rallied steadily since February 4th. On that date the Bank of England (BoE) held interest rates unchanged at 0.1% and signalled that an imminent rate cut is unlikely.
Speaking at the World Economic Forum’s online Davos Agenda on Monday, BoE Governor Andrew Bailey expressed skepticism over whether any existing cryptocurrencies will last. He stated: “Have we landed on what I would call the design, governance and arrangements for what I might call a lasting digital currency? No, I don’t think we’re there yet, honestly. I don’t think cryptocurrencies as originally formulated are it.” He went on to add: “The whole question of people having assurance that their payments will be made in something with stable value … ultimately links back to what we call fiat currency, which has a link to the state.”