The pound sterling rose to a two-month high at the start of the European market session following positive reports that the Pfizer vaccine had boosted demand for risky currencies.
Vaccine makers Pfizer and BioNtech announced Monday that the final phase clinical trials of their vaccines have shown an effectiveness of over 90% in preventing Covid-19.
The greenback dollar, which initially recorded a significant jump following the report, rebounded in Tuesday's trading session trading lower against major currencies.
Deutsche Bank analysts say the pound will be the main currency to benefit from the Pfizer vaccine.
This is because, the UK government has good exposure to Pfizer in its wide and deep vaccine portfolio. In addition, vaccine success will make a huge difference to the UK economic outlook compared to other G10 countries as it is most affected in dealing with the pandemic crisis amid the lack of vaccines.
In addition, pound trading was also supported by the prospect of Brexit deal negotiations. UK Finance Minister Rishi Sunak says significant progress has been made in the Brexit negotiations.
The UK administration has also stated that it is ready to compromise on fisheries issues.
Meanwhile, the focus data on today's European session showed a mixed reading, with the UK unemployment rate rising the highest since 2016 at 4.8%.
