Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Pound Set to Snap 5-Day Win Streak as U.S. Yield Hurts Risk Sentiment

ForexFeb 25, 2021 03:04PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters

By Yasin Ebrahim

Investing.com – The pound slumped Thursday to remain on pace for its first loss in six trading days against the dollar as rising U.S. bond yields sparked risk-off sentiment.

GBP/USD fell 0.66%, to $1.4043.

The pound, which in recent months has moved in tandem with risk assets, followed a slump in equities on a sudden jump in U.S. bond yields. The United States 10-Year, which moves the opposite direction of prices, rose to a more than one year high above 1.6%, before giving back some gains.

Despite its penchant to follow risk assets, not everyone is convinced that the pound has become a risk-on currency. “[The pound’s] role as a risk-on currency is not well deserved,” HSBC said, according to Bloomberg.

The pound has a “slightly lower correlation with equities than other ‘risk-on’ currencies,” and the recent appreciation in the currency has been driven by optimism over the U.K. recovery, the bank added.

The upbeat outlook on the economy has been fueled by the rapid pace of the vaccine rollouts that has alleviated the pressure on the country’s healthcare system, and prompted the government to lay out plans to reopen the economy in the summer.

“[T]he plan to reopen the majority of sectors by mid-May looks achievable and should contribute to a 5% bounce in second-quarter GDP - even if, in reality, the plan to end social distancing entirely in June looks somewhat ambitious,” ING said in a note.

The strength in cable since the turn of the year has caught some by surprise.  Bank of America recently conceded that its skepticism on how long the currency pair could continue to rack up gains was misplaced.  "Our scepticism about the durability of the GBP recovery beyond the initial relief has been misplaced," said Kamal Sharma, a foreign exchange analyst at Bank of America (NYSE:BAC). “[T]he UK's handling of the pandemic in 2020 was lacking, it is in stark contrast to the highly effective vaccine roll-out in 2021," he added.

Pound Set to Snap 5-Day Win Streak as U.S. Yield Hurts Risk Sentiment
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
sanjay jaiswal
sanjay jaiswal Feb 25, 2021 5:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
A jump in GBP value was speculative and GBP/USD should be around 1.38 to 1.39
мαи σf ᴊαиυαяy
мαи σf ᴊαиυαяy Feb 25, 2021 3:55PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Still going down?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email