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Sterling takes British reopening delay in its stride

Credit: REUTERS/NEIL HALL

Sterling was largely unmoved by Monday's news that Britain is set to delay the end of social distancing measures as the government seeks to contain a rapid rise in COVID-19 infections.

Pound down 0.1% vs dlr and 0.2% vs euro in quiet session

Reopening delay largely expected after rise in coronavirus case

Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

Adds detail, latest prices

LONDON, June 14 (Reuters) - Sterling was largely unmoved by Monday's news that Britain is set to delay the end of social distancing measures as the government seeks to contain a rapid rise in COVID-19 infections.

Prime Minister Boris Johnson is expected to announce a delay of four weeks to his February roadmap, under which his government signalled that all social restrictions to control the spread of the disease would be lifted "no earlier" than June 21.

Sterling, which has been one of the best performing currencies in 2021 as investors bet on a strong British economic rebound, hovered just below recent highs.

Against the dollar it dipped as much as 0.3% to a one-month low of $1.4069 GBP=D3 but recovered some ground to $1.41, down 0.1% on the day.

The euro was 0.2% stronger against the pound at 85.96 pence EURGBP=D3, still stuck within the range of the past two months.

ING analysts said a delay to the easing of restrictions was expected and investors were more focused on economic data.

"We do not think this does too much damage to GBP, which instead will be focused on fresh macro updates on jobs and retail sales - both expected to be GBP supportive," they wrote.

Bank of England Governor Andrew Bailey is due to speak at an event later on Monday, with investors watching for any signals on the direction of monetary policy and his views on inflation.

The central bank has taken an initial step to slow the pace of asset purchases and investors are pricing in a first interest rate rise from record lows late next year.

Britain's relatively rapid COVID-19 vaccination rollout and signs of a strong economic rebound have bolstered sterling in recent months and encouraged investors to bring forward their expectations for some limited monetary tightening.

The Bank of England gathers for its next policy meeting on June 24.

(Reporting by Tommy Wilkes Editing by Alexander Smith and David Goodman)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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