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Pound Holds Recent Gains as UK Enters 2nd Phase of Reopening

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LONDON, May 17 Reuters Sterling held on to recent gains against the dollar on Monday as Britain took a big step towards reopening its economy, lifting a number of social restrictions imposed to combat the COVID19 outbreak.

Cafes, bars and restaurants will reopen for indoor service and a ban on international travel has also been lifted, among other easing measures.

Sterling has gained against the dollar for two weeks straight, and on Monday, consolidated near the 1.41 mark. It traded flat in early London deals, at 1.4097.

It was 0.06 higher at 86.09 pence per euro.

It has been a welltelegraphed move, but major reopening in the UK today should continue to be welcomed by UK asset markets and the pound, said ING strategists in a note to clients.

However, there is growing concern about the B.1.617.2 variant of the coronavirus, which British scientific advisers say will become dominant in the United Kingdom and is more transmissible than a variant first identified in Kent, England.

Despite threats from the Indian variant, the scheduled reopening will keep expectations of a summer UK recovery on track and feed into the BoEs upbeat assessment of the UK activity outlook.

Sterlings gains this year have been aided by a more hawkish Bank of England, which has begun tapering asset purchases, and by Britains vaccination drive.

Analysts also say a combination of a stronger UK economic rebound than expected and the belief that any Scottish independence vote is a long way off…

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