Pound Sterling Weakens Amidst Delayed Vaccine Rollouts
The British Pound is at risk of plummeting. This precarious position is due to the delays in vaccine distribution, which forced medical professionals to cease vaccine operations for patients not at risk.
Comparisons Between GBP and EUR
In late February of this year, the value of the British Pound skyrocketed following the start of vaccine rollouts. Its value went up to just over $1.40. The euro, on the other hand, fluctuated between $1.20 and $1.21. Bloomberg reports that this was caused by the UK’s rapid distribution of COVID-19 vaccines. At the time, the UK had administered more than 27 doses for every 100 people, which far outpaces the EU’s rate of six doses.
But in a slight turnaround, the euro has climbed over the past few weeks. Its value had dropped to $1.17 at the end of March, but it rose to $1.19 as on April 15, according to MarketWatch’s currency tracker. Meanwhile, the British Pound has been fluctuating since the beginning of March, from $1.37 to $1.39 on April 8 and back to $1.37 by April 15. Many experts have attributed this to the state of the vaccine rollouts in the UK.
Issues in Vaccine Distribution
Excitement over the COVID-19 vaccine is dying down in the UK in large part due to supply issues. According to the NHS, there was a reduction in the number of national inbound vaccines. Medical professionals stopped accepting appointments for new patients, and the UK’s chief medical officers have since shifted to prioritise at-risk patients.
On April 8, it was reported that more than 5.6 million people had received the two required doses of the COVID-19 vaccine. Meanwhile, 31.7 million have only had their first dose. That’s nearly half of the country’s population. Due to the supply issues, these individuals have no choice but to wait for their turn.
Forecast for the British Pound
The delays in vaccine distribution are likely the biggest cause of the British Pound’s downward trend. To a certain extent, it could also be the reason for the euro’s sudden uptick. Regardless, so long as these setbacks continue to hinder vaccination, the British Pound remains in a precarious position.
The British Pound has always been a profitable investment in the forex market. According to FXCM’s guide to forex, GBP/USD is a major currency pairing given the volume of trades between the two currencies. It’s one of the most liquid and most widely traded pairs in the forex market. This puts investors at a crossroads. For those who’ve yet to purchase the British Pound, it might be worth doing so now, while its value is low against the US Dollar. However, you’d have to wait for an uptrend to make a profit on your investment. Essentially, anyone who trades in the British Pound could face severe losses if the vaccine rollouts do not normalise soon. And with no word yet from the country’s healthcare leaders, one cannot be sure of when that will be.
With the look of recent reports, the British Pound seems at risk of plummeting. Additionally, with the Brexit withdrawal agreement in effect, the country’s economy is sure to shrink in the coming years, further weakening the British Pound. As an alternative course of action, investors can opt to purchase euros and sell their GBP holdings instead. The EUR/GBP pair is a promising lead, given the recent turnaround. If the trajectory of these currencies doesn’t change any time soon, investors would be wise to take advantage of it.
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