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UPDATE 1-Sterling rises as new health minister calls for COVID restrictions to be lifted

By on June 28, 2021 0

* Chart: World exchange rates in 2020 tmsnrt.rs/2egbfVh

* Chart: Trade-weighted pound sterling since Brexit vote tmsnrt.rs/2hwV9Hv (Add chart, update in depth)

LONDON, June 28 (Reuters) – The pound sterling rose slightly on Monday after new UK Minister of Health Sajid Javid said he wanted all COVID-19 restrictions lifted as soon as possible.

Javid was due to brief lawmakers later Monday on whether the restrictions should be lifted on July 19, as the government had previously reported. Javid replaced Matt Hancock, who resigned on Saturday after admitting to breaking COVID-19 guidelines with an affair.

“As the former Chancellor (Minister of Finance) he (Javid) will be more sensitive to the costs incurred by the economy of lockdowns,” said Jane Foley, head of foreign exchange strategy at Rabobank.

Positive daily cases have been increasing for the past month in Britain, but a rapid vaccination program appears to have weakened the link between infections and deaths, with daily deaths remaining around 20 or less.

The British pound rose 0.2% to $ 1.3896 against the dollar at 11:30 a.m. GMT, but it was on track for its worst months against the greenback since September.

Against the euro, the pound rose 0.2% to 85.78 pence, but still braced for the worst quarter against the common currency in a year.

Neil Jones, head of currency sales at Mizuho Bank, attributed the rise in the pound to seasonal fluctuations.

“Historically, price movements tend to suggest a firm sterling at the end of the month and the quarter,” he said.

This month, the British pound fell for the first time since April below $ 1.38 against a strengthening dollar after the US Federal Reserve surprised markets by signaling that it would raise interest rates and end emergency bond purchases sooner than expected.

The pound was one of the worst performing G-10 currencies last week after the Bank of England kept the size of its stimulus package unchanged and said inflation would exceed 3% on reopening economy, but the rise above its 2% target would only be temporary.

Investors will also this week follow a dispute between Britain and the European Union over post-Brexit trade in the British province of Northern Ireland.

The current grace period for exemption from controls on UK-made sausages and other chilled meats transferred to Northern Ireland is due to end on June 30.

“The background music on this had been positive last week, but not hearing anything until Wednesday could piss off GBP,” ING strategists wrote in a note.

Reporting by Joice Alves Editing by Gareth Jones