* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
(Updates prices, adds detail about AstraZeneca vaccine)
By Elizabeth Howcroft
LONDON, Feb 8 (Reuters) - The pound had a quiet start to the
week, overall flat on the day against the dollar and euro, but
analysts remained bullish on its outlook and the latest
positioning data showed the speculative long position on the
British currency had increased.
The pound has strengthened against both the dollar and euro
in February, boosted by heightened risk appetite in global
markets, optimism surrounding the UK's COVID-19 vaccine rollout
and a lessening of negative rates expectations.
Britain has injected over 12 million first doses of COVID-19
vaccines and is on track to meet a target to vaccinate everyone
in the most vulnerable groups by mid-February.
"Sterling is benefiting mostly from the vaccine race – it’s
really the main differentiator," said Ned Rumpeltin, head of
European currency strategy at TD Securities.
"It’s kind of run out of steam here, just below $1.37," he
said, noting that the pound has struggled to break above that
level since 2018.
Although the pound fell somewhat during European trading
hours, it then recovered these losses and was down less than
0.1% against the dollar at $1.3729 at 1638 GMT.
Versus the euro, it was up less than 0.1%, at 87.66 pence
per euro.
The Bank of England reported the findings of its
consultation with banks about the feasibility of implementing
negative rates last week.
Banks told the BoE that they would need at least six months
to work out how to respond to negative rates - prompting the
pound to rise as investors scaled back any expectations of the
policy being introduced.
Negative rates are "unlikely to happen over the next 6
months due to operational risks, while the need to go negative
after the 6-month period will be rather low as we expect a
strong 2Q economic recovery", ING FX strategists Francesco
Pesole and Petr Krpata wrote in a note to clients.
"Coupled with the fast vaccination, GBP is set to benefit
and GBP/USD to grind slowly higher next week," they said. They
expect cable to move towards $1.50 by the end of the year.
Speculators' net long position on the pound grew in the week
to Feb. 2, according to weekly CFTC futures data. The market has
been net bullish on the pound since early December 2020
, with the UK's relative success in vaccine
rollouts helping to improve sentiment.
Britain, along with France, Germany and Australia, voiced
support for the AstraZeneca COVID-19 vaccination on Monday after
South Africa halted its roll-out when research showed it offered
minimal protection against mild infection from a variant
spreading there.
(Reporting by Elizabeth Howcroft; editing by Ed Osmond, Larry
King and Mark Heinrich)
Astrazeneca (AZN)