European session review: GBP appreciates, supported by UK's quick vaccine roll-out, better-than-expected manufacturing PMI data

GBP rose against most of its major counterparts in the European session on Monday, as bets for a swift recovery of the UK's economy heightened as the country moved fast with the implementation of its COVID-19 vaccination program. 

Official data showed that more than 20 million people in Britain have received their first dose of a COVID-19 vaccine. The UK's prime minister (PM) Boris Johnson said the milestone is a "huge national achievement", adding that "every jab makes a difference in our battle against Covid". The government's target is to offer all adults the first shot by the end of July. Britain also reported that nearly 800,000 people have received a second dose.

The UK's factory activity data for February and mortgage approvals figures also offered cause for optimism. 

The latest survey from IHS Markit revealed that the UK’s manufacturing activity grew slightly faster than initially estimated in February. The IHS Markit/CIPS UK Manufacturing PMI was revised slightly higher to 55.1 in February 2021 from a preliminary of 54.9 and 54.1 in January. Economists had forecast the indicator to remain unrevised. IHS Markit noted that the February upturn of the UK manufacturing sector was constrained by supply-chain disruption and increasing cost pressure, keeping output growth only marginal despite a slight improvement in new order intakes. 

Meanwhile, the Bank of England (BoE) announced that the number of approvals for house purchase in the UK, which is an indicator of future lending, dropped to 98,994 in January from 102,809 in December. This exceeded economists’ forecast of 96,000 mortgage approvals for January. 

Market participants also await the announcement of the budget by the British finance minister Rishi Sunak on Wednesday. On Sunday, Sunak pledged to support the economy while the country remains under coronavirus restrictions. It is expected that the finance minister will announce more borrowing on top of his almost GBP 300 billion of COVID-19 spending and tax cuts.