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Pound sterling falls after vaccine decline

The UK’s vaccination drive has been disrupted as April is forecast to see less vaccines available, causing GBP value to sharply decline against the euro.

Vaccination progress continues to be one of the bigger drivers in the currency market, and fresh concerns over the pace of the UK’s vaccine roll out are weighing on the pound. This has caused sterling to drop this morning to a fresh low of 1.1501 on the interbank rate against the euro and 1.3669 against the US dollar.

There are worries about the speed of the UK’s vaccination program as April is forecast to see less vaccines available, and there are also worries of uptake, following widespread reports over the risk of blood clots from the AstraZeneca vaccine in the under 30’s, which could yet further hamper progress.

The moves lower for sterling may ultimately be some consolidation and profit taking by investors following many weeks of healthy gains since there are still many positives relating to the UK’s program.

The Times reported yesterday that the UK could reach herd immunity by the coming Monday, with 50% of adults having been vaccinated and 42% of the population having been exposed to the virus.

The UK government confirmed yesterday it is sticking to its roadmap to open the high street next week and to embark on further easing of restrictions in May and June as planned.

To understand why the pound has dropped so much this week it is well worth remembering why it had been so strong. It has been widely reported that there has been much good will extended to sterling, and that a very high expectation of future success had been ‘priced’ into the levels.

What we have seen this week is some slightly less favourable news coming to light, plus a much stronger US dollar and euro fighting back as their economic recovery and vaccine programs begin to gather pace too.

Previously, the pound has reached 13-month highs against the euro of 1.18 and against the US dollar of 1.42. When we consider the pound was near 1.10 at the beginning of 2021 you can see we are still holding onto many of the gains the pound has made.

A £150,000 transfer is still achieving €7,500 more today than at the lower points of January, based on the interbank rate movements.


Next week is key for sterling with investors likely to be keenly tracking the latest news relating to the opening of the high street. With pubs and restaurants allowed to resume an outdoor service, and shops opening too, it will be interesting to see how this shapes sentiment towards the UK’s path out of lockdown.

On the more positive side, seeing Brits back in the hairdressers, shops and enjoying outdoor hospitality could be very positive for the pound. One of the key reasons for the pound having risen is the expectation that the easing of restrictions will see ‘pent-up’ demand released in the form of spending in the hospitality and retail sectors, leading to an economic bounce that will help the UK economy.

The other side paints a less positive picture, with sterling at risk of falling as concerns over rising infection rates as a result of the eased restrictions forces the government to rethink further plans, which might hinder the pound.

Only two weeks ago sterling had a similar wobble on fears over the supply of AstraZeneca vaccine fears, only for it to quickly recover ground as the fears subsided.

Vaccine progress looks likely to continue to be the main driver of sentiment and with the news varying on almost daily basis it is a very important time to be up to date with your account manager, please speak to us to learn more about the latest news.


The euro has been benefitting from some improved economic data and vaccination sentiment this week, as investors begin to see some traction with Spain, France and Germany all approaching 20% of the population having been fully vaccinated.

On the economic data front, German Services data this week jumped back into growth with a reading of 51.5, rising from 45.7, where anything above 50 represents growth.

France and Spain also showed increases in similar data which paints a healthier view of the Eurozone economy, despite some fresh concerns over rising COVID case numbers and a recent lockdown in France.

A separate survey showed business confidence at a 37-month peak painting a much more positive outlook ahead for the Eurozone.

To understand the latest news and movements for the euro, we do need to bear in mind some of its perception so far in recent weeks where it had been viewed more negatively because of vaccination rollout concerns and rising case numbers.


This news is great news for euro sellers who will be looking to buy the pound where it is currently the best time according to the interbank rate to be selling euros for pounds since March 3rd.

Whether this is the beginning of a sustained move back below 1.15 or above 87 pence is unclear, as mentioned this might just be more of a correction as the EU vaccination program gathers pace and the economic data points to more positive times ahead for the Eurozone.

What will be interesting is the outcome of the latest European Central Bank (ECB) meeting on April 22nd where previous suspicions that the ECB will need to look at further monetary easing to help sustain the Eurozone through the worst of COVID might prove unnecessary.

Indeed, where usually for some currencies the prospect of cutting interest rates or extending a QE program might weaken the currency, for the Eurozone it has been discussed that this might strengthen the single currency by demonstrating confidence in the region.

In their latest assessment the OECD did highlight that countries and economies heavily reliant on tourism could struggle the most to come of the worst from COVID, this would include Europe so there may still be much to do to fully convince investors the Eurozone can strongly rebound economically from the COVID pandemic.


The US dollar has finally been finding some favour in recent weeks, as the future projections of economic activity causes investors to make longer term bets on the US Federal Reserve raising interest rates as the US economy heats up.

This week, the Fed were quite ‘dovish’ or softer on the prospect of raising interest rates in the future, but the currency market and financial markets in general are more suspicious hikes will come sooner.

The US dollar is stronger because Joe Biden is now earmarking $4 trillion of stimulus alongside a so far very successful vaccination program that seems destined to create some boom times for the American economy ahead.

That means millions of Americans will soon be back in the shops and spending which alongside the trillions of stimulus will likely lead to the US Federal Reserve being forced to seriously consider raising interest rates.

With the US dollar accounting for about 60% of globally traded FX, and the changing of interest rates one of the single biggest influences for currency strength, there could be some more turbulent times ahead for the US dollar.

Typically, the raising of interest rates strengthens the currency concerned, and whilst the US central bank themselves don’t anticipate this until 2024, the currency markets think it could be as early as next year.

April 28th is the next Fed meeting where it will be interesting to get their latest take on the successful vaccine program and how they view the US economy performing ahead. As of this week over 30% of Americans have had one dose, and with delivery reaching a record 4m jabs in a day last Saturday. Joe Biden has also famously pledged to vaccinate 200m Americans within his first 100 days, up from a promise of 100m in December.

All in all, there are many positives for the US dollar at present, and depending on how the Fed respond to this news, there might be further to go.

For more information on the US dollar, please get in touch with any of our expert and knowledgeable team.

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