Given the fact that hundreds of protestors were yesterday gathered in Westminster to show dissent against the government’s coronavirus measures, you could be forgiven for thinking that we were in the midst of a harsh winter lockdown. End of the Lockdown – What Does it Mean for the UK Economy.
However, yesterday actually saw the cessation of lockdown and social distancing measures in the UK, as the economy largely returned to normal and hospitality venues were able to service customers at full capacity.
But what will the new rules mean for the national economy as a whole, and how will the GBP fare against the Euro?
The End of Lockdown
The end of lockdown has been exacerbated by the UK’s aggressive and proactive vaccination program, which was built on heavy investment and the procurement of several different vaccines from across the globe.
Amid a series of coronavirus and communication disasters, this has proved to be a considerable success. To date, (July 17th), 36 million people have been fully vaccinated in the UK, with this equating to approximately 54% of the country.
Make no mistake; the UK leads the world in this respect, with a total of 123.4 vaccine doses administered per 100 people. Israel is next with 121.4 doses administered per 100 residents, just ahead of Canada, China, the EU and the US.
Of course, other countries (especially EU member states) are closing the gap on the UK, particularly given the recent shortage of Pfizer doses. However, the head start and performance to date has helped to break the link between infections and hospitalisations to some degree, empowering the government to push ahead with the cessation of lockdown.
The impact on the economy is likely to be immediate – especially when you consider that pubs and restaurants have previously been operating at between 40% and 75%.
By retaining their increased outdoor space and removing all indoor social distancing measures, these entities will achieve 100% capacity once again.
This trend is likely to be prevalent across all sectors and marketplaces too, fortifying the wider economy and enabling it to steal a march on its international competitors.
What About Investors and the Pound?
Ultimately, this translates into a healthy GDP growth forecast of 6.8% this year, followed by expansion of 5.1% in 2022. This has provided a huge boost to economic sentiment, while highlighting the impact of the coronavirus vaccine as a springboard for renewed growth.
This has also been reflected by the pound, with the GBP/EUR having recently rebounded from a previous low to reach the 1.1651 level.
This trend is likely to be maintained for now, even if growing concern about rising case rates (as opposed to deaths and hospitalisations) has begun to chip away at this positiving during the last 24 hours.
From the perspective of speculators and futures trading in the UK, the latest news also creates further opportunity by suggesting that the pound will continue to rise against the Euro and a basket of currencies (aside from the US dollar) in the near-term.
The GBP/EUR pairing is definitely one to watch, not least with the single currency also poised to fall against the rising greenback.
This will only strengthen the appeal of the GBP/EUR, particularly at a time where growth will return quickly to the UK economy.