The British pound hit a six-week low against the dollar (GBPUSD=X) on Tuesday morning, slipping into its weakest week since the start of February off the back of upbeat economic sentiment in the US and vaccine supply fears in the UK.
The pound had slipped 0.7% by mid-morning in London, to trade at £1.38 against the dollar. It was also 0.3% lower against the euro (GBPEUR=X), to trade at £1.16.
While economic sentiment was springy in the US, due to president Joe Biden's $3tn (£2tn) stimulus package and vaccine rollout, the pound was weighed down by concerns about a shortage in vaccine supplies on home turf.
Potential shortages and reports of EU blockades of deliveries of the Oxford-AstraZeneca vaccine (AZN.L) have meant the UK government's plan to exit the current COVID-19 lockdown could be delayed, knocking prime minister Boris Johnson's roadmap off course.
Cable traders are looking ahead to Federal Reserve chair Jerome Powell and US Treasury secretary Janet Yellen's joint statement before the Financial Services Committee later today. Prepared remarks released on Monday painted an optimistic picture for the US economy.
"The US bond sell-off hasn't thus far tightened financial conditions, which is key to any long US dollar view. And while the market remains focused on the slow vaccination rollout in Europe, the Eurozone targets a full vaccine rollout by August, where they might still succeed," said Stephen Innes, chief global market strategist at Axi.
"Indeed, the market must be convinced that we have hit rock bottom where Euro pessimism is peaking as the portfolio investment deficit appears to be bottoming, thanks to a rebound in foreign equity inflows, which were positive in both December and January."