The British pound managed to start the week very well, rising half a percent and recording its highest levels in a month, against the United States Dollar and the Euro. This happened at the start of a short week in the United Kingdom, due to the Easter Holidays, not to mention that it also coincided with a broad shift down in global marketing sentiment, following the positive news regarding the health of Boris Johnson.
The PM won against COVID-19
The Prime Minister was just released from St. Thomas Hospital in London, following successful treatment, after being diagnosed with COVID-19 infection.
As a side note, the market also reacted last week, following the news of the worsening in the PM’s health, as the GBP lost ground on Tuesday night when Johnson has been admitted to the ICU.
The entire situation regarding Boris Johnson’s condition led to a new dose of uncertainty being injected into the UK’s political-economical mix, as, over the past years, the GBP showed a tendency to respond poorly to such situations. Therefore, the news that the politician has been released from the hospital could have an impact on the Pound for at least a few days.
On Monday, the Pound-to-Euro exchange rate reached 1.1447, this being over half a percent higher, compared to where it started the week. As for the Pound-to-Dollar exchange rate, it also registered a 0.45% growth, reaching 1.2533.
There’s still room for improvement
“We continue to see upside potential for Sterling. Despite its relative liquidity, the Pound was one of the G10 currencies most harshly punished by the dollar funding squeeze, possibly due to the UK’s large financial sector,” says Gaétan Peroux, a Strategist at UBS.
“As this issue seems to have been resolved, we expect Sterling to regain its lost ground by mid-year,” he added.
Lately, the GBP has tended to rally alongside the global stock market, as it maintains a positive correlation with risk appetite, while the broad recovery in global stocks led to all of the use seeing a stronger Pound.