LONDON (UK): Sterling came down on Tuesday after cable jumped to its highest in more than two weeks, while traders continued to rely on a speedy re-opening of the British economy.
Bets on an economic recovery, spurred by a rapid COVID-19 vaccination programme, have supported sterling over the past few months.
On Monday, the pound recorded its best day against a weakening dollar since Feb. 18, as U.S. Treasury yields held below recent highs, while low liquidity with many parts of the world off for the Easter break was also seen exaggerating moves.
But as traders returned from the long weekend, cable was 0.5% lower at $1.3833 at 1030 GMT, after earlier touching $1.3919, its highest since March 19.
Against the euro, sterling hit a one-week low of 85.45 pence on Tuesday, after having its best quarter since 2015 versus the single currency.
“It is the re-opening of London this morning that is seeing sterling under some initial pressure, as sellers have returned and taken advantage of the rally seen over the last 24 hours or so,” said Stuart Cole, chief macro strategist at Equiti Capital in London.
Cole added the selling appeared to be a mixture of profit-taking and new short positions being initiated.
Market participants continued to expect further gains for the pound in the months ahead.
With the vaccine programme rolling out rapidly across Britain and infection numbers falling, Prime Minister Boris Johnson confirmed on Monday a planned re-opening of the economy would take place next week.
Shops, gyms, hairdressers and outdoor hospitality areas in England will re-open. The government is also looking at a COVID-status certification system, or vaccine passport, to help re-open larger events.
Britain will begin the rollout of Moderna’s COVID-19 vaccine in mid-April, vaccine deployment minister Nadhim Zahawi said on Tuesday, adding the inoculation programme was on track to meet government targets.
Some 12 million second doses are planned to be distributed in April.
Johnson also said on Monday his government hoped non-essential international travel would resume from May 17.