24 hours ago, the pound has surged again, and the exchange rate against the US dollar hits a new high in the past three years.
As of February 16, pound has risen to 1.3941 against the US dollar, reaching its highest point since April 2018.
pound pound also rose by 9.0 against the RMB, setting a new high in the past three months.
In addition to the pound, the UK stock market also achieved a sharp rise on Monday (February 15), setting its best single-day performance in the past six weeks.
Among them, the UK FTSE 100 index (FTSE 100) rose 2.5% on a daily basis, and has now reached 6756 points. In terms of holdings and capital volume, in the past 24 hours, market speculators have significantly increased the pound's long position (buy pound bull futures contracts), adding 1 billion US dollars .
1 billion also hit the largest weekly increase in a year, bringing the pound long positions to its highest level since February 2020.
The red line in the figure below represents the pound against the US dollar, and the gray area represents the net position of the pound.
long buying generally refers to investors who are bullish in the futures market and then buy futures contracts and make profits after the price rises.
long positions hit the largest weekly growth in a year, meaning the market is bullish on the subsequent trend of the pound.
As shown in the figure below, the current net long position of the British pound has reached US$1824 billion.
Simply put, the most direct reason for this round of stimulating the rise of the pound and stock market is the latest vaccine milestone announced by the UK (15 million people have been vaccinated, ranking first in Europe).
In addition, the British government will release the unblocking plan next Monday, which has also increased the market's expectations for economic recovery.
At the same time, the central bank announced its interest rate resolution at the beginning of this month, and further eliminated the negative interest rate risk .
Next, we will look at it one by one, divided into 1) Vaccine rollout 2) Unblocking is imminent 3) Negative interest rate expectations further decline Three points:
1. The UK has reached a vaccine milestone, and 15 million susceptible people have been vaccinated
vaccine, as the UK has rapidly promoted the vaccination plan, increasing the market's expectations that the UK's economy will be able to recover faster than other Western countries has become the most important factor in promoting this round of pound rise.
htmlOn February 14, the UK officially announced that it has officially achieved the first phase of vaccine target for vaccination with 15 million people.
The subjects who have completed vaccination include all elderly people aged 70 and above, extremely vulnerable in clinical practice, front-line medical staff, nursing home workers, and elderly people in nursing homes.
The ultimate goal of the UK is to inject vaccines for all adults over the age of 18. There are about 50 million people in this group. The 15 million figure means that about 30% of adults in the UK are currently immune. After
completed the target of 15 million, British Health Secretary Hancock also immediately set a new goal: to achieve 432 million vaccines by the end of April. That is, in ten weeks, the number of vaccinated people was increased to 32 million.
Starting this week, vaccine promotion in the UK has entered the fifth priority level - starting to vaccinate all people over 65 years old, and then diminish according to age, and finally achieving the goal of vaccinating all adults.
While speeding up the release of vaccines, Hancock also promised that the supply of vaccines will also keep up with it.
He said that the British government is finding ways to accelerate the process of vaccine production and transportation, strive to increase the weekly vaccine supply, and speed up the vaccination rate of the second shot of the British people as much as possible.
In general, the pound has mainly reaped the dividends of successful vaccination, and the momentum of economic restart after the unblocking is also accumulating.
2. The UK announced the road map for unblocking next week (February 22), boosting economic recovery expectations
According to reports from all parties, British Prime Minister Boris has confirmed that it will announce the road map for unblocking on February 22.
According to previous experiences, every time the news of the unblocking was announced, the pound would rise significantly, and this time the market responded in advance.
After all, a clear unblocking plan will boost economic recovery and enhance market optimism.
According to British media reports in advance, UK will gradually lift restrictions from on March 8 in three stages:
First, primary and secondary schools will reopen campus on on March 8, and people will also be allowed to have picnics outdoors with friends and drink coffee in the park.
With the implementation of the policy, if the R value has been maintained at a low level, then all non-essential stores will reopen at the end of March, and bars and restaurants will also resume outdoor catering services by the end of March, and the 10-point curfew will be lifted.
Similarly, if the epidemic continues to be controlled, major bars and restaurants in the UK will fully reopen in the third phase of the unblocking and resume all services.
analysis points out that as long as the British government does not rush to unblock this time, insists on acting steadily, and avoids the rebound of the epidemic, it can support the long-term trend of the pound.
3. Negative interest rate expectations have further declined
As vaccines are rolled out and unblocked drive economic recovery, the probability of the Bank of England taking out negative interest rate "nuclear weapons" from the arsenal has been greatly reduced.
As we all know, the implementation of negative interest rates will hit the pound exchange rate , while the expected decline in negative interest rates will drive the pound to rise.
combined with the latest situation and the central bank's previous official announcement, the market has basically confirmed that the UK will not implement negative interest rates for the whole year this year.
htmlOn December 4, the Bank of England announced a new interest rate resolution, announcing that it would maintain the current benchmark interest rate of 0.10% unchanged, and stated that will not introduce negative interest rates in 2021.
After the Bank of England issued a statement, the money market has now postponed the UK's negative interest rate expectations to February 2022, before August 2021. In terms of holding positions in
pounds, when the expectations of negative interest rates in the UK rose sharply, speculators generally chose to buy short positions to prevent the risks of negative interest rates in the UK.
But the long positions of the pound have increased significantly after the central bank released the latest signal earlier this month, showing that the market is leaning towards bullish on the pound as the central bank reduces its negative interest rate bets and the UK is quickly vaccinated.
Some analysts pointed out that the Bank of England policy meeting in February was more hawkish than expected, which boosted long positions.
British investors wrote in the end
This article briefly analyzes the reasons for this round of pound rise. As the UK quickly rolls out vaccines and negative interest rates expectations decline, the market's concerns about the UK have dissipated a lot, and the economy has also shown optimistic signals as it is about to unblock.
But it is worth noting that there are still certain risks in the pound at present. First, once the unblocking is too fast, it will cause a rebound in infection and introduce a new round of lockdown, it will definitely put pressure on the pound.
Secondly, we need to pay attention to the Scottish election in May. At that time, Sturgeon will most likely speculate on Scottish independence for the sake of votes. Although it is difficult for the Soviet independence to succeed, if the Soviet independence public opinion rises, it will also have an impact on the pound in the short term.
Finally, there is Brexit. The UK and the EU are still negotiating financial agreements, and any result will have an impact on the pound.
At present, the pound is still bullish in the long term, but there is room for a pullback in the short term. Readers who need to exchange foreign exchange can pay close attention to the exchange rate trend and seize the opportunity to exchange. I will continue to update the pound news in British investors for everyone.
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