The British Currency is Still Overbought
The British currency remains under pressure, although there is no clear downtrend yet. According to analysts at Danske Bank, the pound will continue to benefit from faster vaccination. At the same time, the global attitude to risk may hit the British currency, as happened a few weeks ago. The issue of Brexit has now faded into the background, although the EU and the UK are still fighting over the protocol on Northern Ireland and are negotiating cooperation on financial services. The bank suggests that the pound may still strengthen this year, but also notes that many positive aspects are already included in the price.
The latest UK macroeconomic data was quite weak, so the chances of further strong growth of the pound/dollar rate are low. In the global perspective, the British currency is still overbought, so a change in the fundamental background from positive to negative may cause a reversal in the market. Over time, the pound's prospects will depend even more on expectations of the Bank of England's actions and on possible changes in monetary policy.