* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
By Ritvik Carvalho
LONDON, March 17 (Reuters) - Sterling held firm against both
the euro and the dollar as Britain's dismissal of safety
concerns over the AstraZeneca vaccine gave the currency some
berth to recovery from the previous day's falls.
A number of European countries, including Germany, France
and Italy, have suspended AstraZeneca shots following reports of
blood coagulation disorders in some recipients. Their safety
concerns prompted a selloff in the pound on Tuesday as Britain
is continuing to administer the vaccine.
Sterling then recovered some of those losses on Tuesday
after Europe's medical watchdog, echoing other health bodies,
reiterated its view that there was no evidence that the vaccine
was unsafe.
By 0900 GMT on Wednesday, sterling was flat against the
dollar at $1.3898 and 0.1% higher to the euro at 85.60
pence, not far off a year's high of 85.40 pence per
euro.
"UK authorities have dismissed safety concerns on the
AstraZeneca vaccine, which should leave the pound less
vulnerable than other European currencies to the suspension
story," said strategist at ING in a note to clients.
"A wait-and-see approach may prevail in GBP price action as
we head to the Bank of England meeting tomorrow."
Hopes that Britain's rapid vaccine rollout will lead to a
faster reopening of its economy and a rebound from its worst
annual contraction in output in 300 years have benefited
sterling this year, with the pound until recently the best
performing G10 currency.
However, as a spike in U.S. bond yields lifted the dollar
over the past few weeks, sterling has come well off the $1.4240
- its highest levels against the dollar in nearly 3 years which
it hit on Feb. 24.
Besides optimism about a vaccine-enabled economic recovery,
relief over a Brexit trade deal and the Bank of England's
pushing out of expectations of negative interest rates have also
helped sterling. The BoE meets on Thursday.
Bank of England Governor Andrew Bailey said on Monday he was
more optimistic about the economy, though "with a large dose of
caution", and a recent rise in interest rates in financial
markets was consistent with the prospects of recovery from the
COVID slump.
Rabobank said in a research note that the pace of any gains
for the pound "will be far slower than in the year to date."
"We retain our medium-term forecast of EUR/GBP 0.85 but see
scope for pullbacks to the 0.86-0.87 area in Q2."
(Reporting by Ritvik Carvalho;
Editing by Gareth Jones)
Astrazeneca (AZN)
