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Sterling Holds above $1.39 as Dollar Weakens

LONDON, March 11 (Reuters) - The pound made slim gains on Thursday, holding above $1.39 as the dollar weakened and investors remained focused on hopes that Britain’s relatively successful COVID-19 vaccine programme would support its economic recovery.

Sterling gained 0.1% to $1.3949 by 0858. Analysts said the limited moves were largely driven by the dollar in the absence of any clear catalysts.

The dollar fell 0.2% versus a basket of currencies after benign data on U.S. consumer prices and a decline in Treasury yields led some investors to trim bets on a rapid acceleration in inflation.

The pound fell 0.2% against the euro to 85.82 pence before Thursday’s European Central Bank meeting, where policymakers are expected to signal faster money printing to keep a lid on borrowing costs and commit again to rock-bottom rates.

Sterling has been among the best-performing major currencies so far this year, reaching $1.424 in February. Still, the pound has slipped around 2.5% since its Feb. 24 high.

Among the drivers of the gains have been the UK’s progress on COVID-19 vaccinations and plans to loosen lockdown measures, analysts said, as well as dwindling expectations that the Bank of England would push interest rates below zero.

“The prospects or risks of negative rates have been fully removed - that’s important as well,” said Derek Halpenny, EMEA head of research for global markets at MUFG. Relief a no-deal Brexit was avoided at the end of 2020 may help investors return to the UK, he said..

Reporting by Tom Wilson, editing by Larry King

Source: Reuters

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