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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
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By Joice Alves
LONDON, March 16 (Reuters) - Sterling fell against both the
euro and the dollar on Tuesday with analysts attributing the
move to news that Germany, Italy and France suspended
AstraZeneca's COVID-19 shots amid safety fears,
dampening euphoria in Britain over its swift vaccination push.
Sterling fell 0.3% versus the dollar to $1.3853 at 1118 GMT,
after hitting a one-week low of $1.3809 in earlier trading
. Against the euro, it was 0.4% lower at 86.21 pence,
having touched at 0926 GMT its lowest level of 86.40 pence since
March 5.
The euro zone countries said they would suspend the
AstraZeneca shots after several other European countries
reported possible serious side-effects, but the World Health
Organization said there was no proven link and people should not
panic. Shares in the British vaccine maker were up 3% on
Tuesday.
Britain said it had no concerns, but analysts have been
cautious saying that if the safety fears surrounding AstraZeneca
vaccine are confirmed, this could compromise Britain's speedy
inoculation programme.
"Should the EMA (European Medicines Agency) rule that
AstraZeneca does indeed have material safety concerns, this
would potentially compromise the UK vaccine strategy, even if
the EMA no longer have any standing in the UK post Brexit," said
Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets.
Such an outcome would risk sterling falling to around
$1.3798, Stretch said.
The EMA will hold a news conference at 1300 GMT on Tuesday.
Sterling gained more than 5% against the dollar in the first
seven weeks of the year amid hopes for a relatively fast
economic recovery following a speedy vaccination programme and
declining numbers of COVID-19 cases in Britain.
Dwindling expectations that the BoE will push interest rates
below zero, and the Brexit trade deal with the EU agreed in
December, have also supported the pound, which rose above $1.42
on February 24.
But over the past two weeks, cable fell 3% amid rising
tension between Britain and the bloc, as well as a recent surge
in Treasury yields, which strengthened the dollar and added
pressure on risk currencies like sterling.
The European Union launched on Monday legal action against
unilateral British changes to Northern Irish trading
arrangements.
"The negative news flow about the Oxford vaccine in the EU
and the coincident news about legal action by the EU against the
UK has been sufficient to knock confidence in the pound," said
Jane Foley, head of FX Strategy at Rabobank.
Markets will be looking to the BoE’s announcement on
Thursday, analysts said.
(Reporting by Joice Alves; editing by Emelia Sithole-Matarise
and Ed Osmond)
