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* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Updates prices, adds commentary and detail)
By Elizabeth Howcroft
LONDON, Jan 28 (Reuters) - The British pound retreated on
Thursday from the previous session's multi-month highs, as
investors tempered some of their optimism about the UK vaccine
rollout, with the lockdown in England set to last until at least
March.
Sterling surged to its highest since May 2018 against the
dollar in early London trading on Wednesday and later reached an
eight-month high against the euro - a move analysts attributed
to the UK rolling out vaccines faster than continental Europe.
But concern about vaccine rollouts globally, and the impact
of mutations of the virus, created a cautious tone in markets,
and a stronger dollar, which meant that the British currency
eased off these highs on Thursday.
"In this environment, everything is pointing towards refuge
in the dollar, even if the moves are marginal in today's trading
session," said Simon Harvey, an FX strategist at Monex Europe.
"The pound is not sheltered from this strong USD
environment, despite the UK's aggressive rate of vaccine
distribution, although it remains relatively robust against
other G10 peers," he said.
Britain said on Thursday it must get all the COVID-19
vaccines it had ordered and paid for, after some European Union
politicians asked drugmaker AstraZeneca to divert doses from the
UK to make up for a shortfall in supplies.
At 1156 GMT, the pound was down 0.2% against a stronger
dollar, at $1.3661, compared with its Wednesday high of $1.3759
. Versus the euro, it was down around 0.2% at 88.59
pence per euro, after peaking at 88.135 in the previous session
.
"We consider sterling optimism to be excessive and we see
the risk of disappointed expectations. We therefore urge caution
about betting on further sterling gains," wrote Commerzbank FX
strategist You-Na Park-Heger in a note to clients.
"The markets are clearly ignoring that the current infection
situation in the UK is still very tense," she said. "There is a
high degree of uncertainty as it is difficult to say how the
pandemic is going to develop short-term and when and how quickly
the restrictions can be eased."
Britain has the world's fifth highest death toll from
COVID-19, and Prime Minister Boris Johnson has indicated that
the strict COVID-19 lockdown in England will last until March 8.
British households have cut debit and credit card spending
sharply and the proportion of workers on furlough has risen to
its highest since July after new coronavirus lockdown
restrictions came into force earlier this month.
(Reporting by Elizabeth Howcroft; editing by William Maclean,
Larry King)
