Sterling rises as Britain gets ready for April re-opening

LONDON: Sterling rose against the dollar and the euro on Wednesday as traders looked past economic data in Britain and focused on a planned April re-opening of shops in England.

Data showed that Britain's economy grew faster than previously thought in the final three months of last year, with gross domestic product rising 1.3pc from the previous quarter. It still shrank by the most in more than three centuries in 2020.

Mortgage lender Nationwide said British house prices grew less than expected in March. House prices fell by a monthly 0.2pc, slowing the pace of their annual increase to 5.7pc from 6.9pc in March.

Traders shrugged off the economic data as "these data points won't be reflective of conditions in the UK economy soon as the stages of re-opening start to elapse", said Simon Harvey, senior FX Market Analyst at Monex Europe in London.

Lockdown restrictions are gradually being lifted in England, with more substantial changes, including the re-opening of non-essential retail and outdoor hospitality settings, set to take place on April 12.

Scottish First Minister Nicola Sturgeon also plans to progressively ease restrictions in April.

Sterling was 0.4pc higher at $1.3792 at 1500 GMT versus the dollar, which rose to multi-month peaks versus other currencies this week amid generous U.S. fiscal stimulus and speedy vaccinations.

After rising above $1.42 in February to its highest level against the dollar since April 2018, sterling lost some ground versus the greenback in March.

Monex's Harvey said cable currently looks cheap "given what could be in store next month for the UK economy".

Versus the euro, sterling was on track to its sixth consecutive monthly gain. It was 0.1pc higher at 85.19 pence against the single currency.

The pound has gained 4.7pc against the euro so far this year, with analysts attributing the move largely to the pace of the UK's vaccine rollout, while continental Europe's vaccination programme has lagged behind and COVID cases are rising.

"If things carry on the way they are now, I think we could see EURGBP trading around 83.00 pence by the end of the year," said Stuart Cole, chief macro strategist at Equiti Capital in London.