The pound to dollar rate made a charge for the 1.41 level yesterday. Despite falling just short, the pair touched a fresh three year high after Boris Johnson set out his roadmap to the end of lockdown. During his statement, he outlined the government’s four-phase exit plan, which will be dependent on key criteria, including data around infections and the ongoing success of the vaccine programme.
Each stage of Mr Johnson’s so-called roadmap is scheduled to last for five weeks, with the final step – when most restrictions would be lifted – not starting until 21 June at the earliest. Last year’s regional tier system will be scrapped, with all changes coming into force nationwide. The prime minister suggested much of England could be back too normal by the end of June.
Mr Johnson told MPs in the House of Commons: “We cannot persist indefinitely with restrictions that debilitate our economy, our physical and mental well-being, and the life chances of our children. And that is why it is so crucial that this roadmap is cautious but also irreversible. We’re setting out on, what I hope and believe, is a one-way road to freedom.”
Having moved to secure vaccine supplies, the UK has been inoculating its citizens rapidly since December – a strategy that has driven sterling strength on hopes of an economic rebound. The UK’s celebrated Covid-19 vaccination programme has seen 17.6 million people – more than a quarter of its population – receive their first dose of a vaccine.
The pressure is mounting on Boris Johnson to deliver on his pledge to do “whatever it takes” to support workers and business through the pandemic. This morning, official figures from the Office for National Statistics showed that UK unemployment climbed to its highest rate in almost five years in the fourth quarter as the economic toll from the pandemic escalated.
Dollar Resumes Slide Lower
The dollar picked up where it left off on Friday, resuming its sliding lower as investors focused on the promise of coronavirus vaccinations and the outlooks for economic growth and inflation.
The dollar’s retreat on Monday was fuelled by a growing belief that the US will end up with too much inflation and too much additional debt – a scenario that could be triggered by ambitious plans to support the economy with government spending and easy money policies.
Investors will closely monitor testimony today from Federal Reserve Chair Jerome Powell to the Senate Banking Committee, for any sign that the Fed might become more mindful of inflation. Also on their radar will be the Consumer Confidence figure for February.
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