The pound, down around 6.5% against the dollar this year, made some gains on Tuesday - largely due to end-of-quarter rebalancing rather than improv
The pound, down around 6.5% against the dollar this year, made some gains on Tuesday – largely due to end-of-quarter rebalancing rather than improvement in sentiment or reaction to Prime Minister Boris Johnson’s plan to fast-track 5 billion pounds ($6.2 billion) of infrastructure investment. Cable was hovering around $1.24 on Wednesday and the June 25-July 1 poll of almost 60 foreign exchange analysts said it would be at the same level in one and three months’ time. It will then shift up a gear to $1.27 by end-December when Britain’s transition period after leaving the EU is due to expire. The pound will be around 4 percent stronger than current levels at $1.29 in a year, a Reuters poll found.
“Our central scenario is that some kind of Brexit deal or delay will be agreed. With this in mind, we think sterling will rise, however, given recent developments, the risks to our forecasts are to the downside,” said Simona Gambarini at Capital Economics.
Meanwhile, the dollar’s dominance will slowly melt away over the coming year on weakening global demand and a bleak US economic outlook but a second shock from the coronavirus would push it higher.
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6.09am update: British mid-caps end higher on hopes of potential COVID-19 vaccine
London’s mid-cap index ended higher on Wednesday on hopes of a potential COVID-19 vaccine, while optimism over fresh stimulus and a pickup in economic activity in the second half of the year persisted.
A COVID-19 vaccine developed by Pfizer Inc (PFE.N) and German biotech firm BioNTech (BNTX.O) showed promise and was found to be well tolerated in early-stage human trials.
“The turning point appeared to be some vaccine news, an element of the pandemic saga that has been missing from the last couple of weeks,” said Connor Campbell, a financial analyst at Spreadex.
The domestically focussed FTSE 250 .FTMC was up 0.4% after closing Tuesday with its best quarter in eight years, partly on the back of historic global monetary and fiscal stimulus. The export-heavy FTSE 100 .FTSE, however, edged 0.1% lower at the end of a choppy session.