GBP Trades Sideways vs USD and EUR amid thin Data Calendar

Sterling is the second best-performing G10 currency versus the dollar this year, up 3.4% year-to-date and trailing only the commodity-linked Canadian dollar. That performance is a result of investors betting on a quicker reopening for Britain’s economy on the back of its rapid COVID-19 vaccination pace.

Britain commenced a third part of a phased reopening last week, allowing indoor dining in pubs and restaurants. Economic indicators such as retail sales are looking up, as are surveys of purchasing managers across industries.

By 0809 GMT, sterling was 0.05% lower against the dollar at $1.4138, some way off a three-month high of $1.4233 hit last week.

The pound was flat versus the euro at 86.57 pence, and off a two-week low of 86.20 hit against the common currency on Tuesday.

“Most of the activity on Cable (sterling/dollar) recently has been a function of dollar moves,” said Jane Foley, head of FX strategy at Rabobank.

“The pound hasn’t been able to gain any tractions vs. the euro since early in the month, which reflects the consensus view that the euro zone is heading for a strong recovery in the latter part of this year.”

The only event with potential to move the currency in an otherwise thin data calendar on Wednesday was a testimony by British Prime Minister Boris Johnson’s former chief adviser, Dominic Cummings.

Cummings, the strategist behind the 2016 Brexit campaign and Johnson’s landslide election win in 2019, will be quizzed by British lawmakers from 0830 GMT on the lessons that can be learned from the pandemic.

Cummings, who left the government late last year, has said the British health ministry was a “smoking ruin”, that Western governments failed during the crisis, and that the secretive British state was woefully unprepared for the pandemic.