Although the British pound started the year with steady gains, the currency has come under pressure from the recent news that the EU is going to ban the export of vaccines to the UK. The successful roll-out of vaccination in the UK initially supported the pound sterling. However, the fact that Britain relies heavily on imported COVID-19 drugs casts a long shadow over its national currency, especially in light of tensions with EU leaders on this issue. That is why the pound sterling has fallen dramatically against the US dollar, sagging to a two-week low. The British currency fell by 0.5% against the greenback. As a result, the pound is currently trading around its lowest level since March 9 - 1.3791.
The leading EU countries are planning to discuss a possible ban on the export of coronavirus vaccines at the summit to be held next Thursday, March 25. Yesterday, the UK government demanded that the European Commission allow the delivery of previously ordered vaccines to its territory. In response, Brussels pointed to the drug from Anglo-Swedish pharmaceutical company AstraZeneca.
However, the world community does not trust this manufacturer. Thus, the management of AstraZeneca said yesterday that, according to the latest research, its COVID-19 vaccine developed in partnership with the University of Oxford was 79% effective in preventing symptomatic illness. In this regard, the company is going to apply in the next few weeks for emergency use authorization for its Covid-19 vaccine in the United States. If the US Food and Drug Administration approves it, the vaccine from AstraZeneca (which until recently was considered unsafe) will become the fourth in the US, following vaccines from Pfizer, Moderna, and Johnson & Johnson. In other words, millions of Americans will be vaccinated with this drug. Amid the news, the shares of AstraZeneca gained 4% yesterday.
However, the US National Institute of Allergy and Infectious Diseases expressed concern that AstraZeneca might have provided an incomplete view of the vaccine's effectiveness. The Data Safety Monitoring Board (DSMB) suggested that AstraZeneca's research team might have included outdated information in trial results of its Covid-19 vaccine.
On the back of increased concerns over the Anglo-Swedish manufacturer of coronavirus vaccines, a growing number of EU member states are joining together to support the idea of banning vaccine exports to the UK. However, this will threaten the vaccination campaign in the country and the UK will have no chance for a successful recovery from the crisis. Although the odds that the European Commission will take such extreme measures are not great, such a scenario cannot be excluded.
According to the data provided by the Commodity Futures Trading Commission (CFTC), speculators reduced their net long position on the British pound against the US dollar in the week to March 16. Although the market is still overall bullish on the pound sterling, the size of the bullish position has considerably shrunk for the past two weeks.
Notably, the UK unemployment rate suddenly fell to 5.0% in the three months to January, recent official data showed. The situation improved even despite the fact that the authorities had introduced tougher restrictive measures to prevent the spread of the coronavirus. At the same time, analysts predicted an increase in unemployment to 5.2%.