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GBP Gains as Virus Outlook Improves Relative to EU

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Rates as of 0500 GMT

Market Recap

GBP was far and away the bestperforming currency, as you can see from the chart. No clear trigger that I can find. I assume part of it is just snapback from its recent weak patch. The currency has been under pressure recently with doubts about the pace of the UK vaccine program and questions about the efficacy of the OxfordAstraZeneca vaccine, the main one in use in the UK.

Some of those doubts were probably dispelled yesterday when Britain and the EU released a joint statement ahead of yesterdays European Council meeting saying they are working together to create a winwin situation and expand vaccine supply for all, as well as a government spokespersons assertion that the UK is on track to meet its vaccine rollout targets and the plan to ease lockdown remains on course. Parliament voted to extend the Coronavirus Act 2020, which paves the way for the governments planned reopening.

The UKs response is diverging from that of the EU, where the trend is in the opposite direction Belgium and France were forced into new lockdown measures this week and Germany is debating further measures. Moreover, the European Council meeting yesterday laid bare the disarray in the EUs vaccine distribution plans as leaders clashed over how to provide additional doses to member states. The tense and sometimes illtempered discussions, as the FT put it, ended with no resolution to demands from predominantly poorer eastern member states for part of 10m in…

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