LONDON, March 16 — Sterling fell against both the euro and the dollar today as Germany, Italy and France suspended AstraZeneca’s Covid-19 shots amid safety fears, dampening euphoria in Britain over its swift vaccination push.

Sterling fell 0.6 per cent versus the dollar to a one-week low of US$1.3817 (RM5.69) at 0935 GMT. Against the euro, it was 0.6 per cent lower at 86.40 pence, touching its lowest level since March 5.

The euro zone countries said they would suspend the AstraZeneca shots after several other European countries reported possible serious side-effects, but the World Health Organization said there was no proven link and people should not panic.

The United Kingdom said it had no concerns, but analysts have been cautious saying that if the safety fears surrounding AstraZeneca vaccine are confirmed, this could compromise Britain’s speedy inoculation programme.

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“Should the EMA (European Medicines Agency) rule that AstraZeneca does indeed have material safety concerns, this would potentially compromise the UK vaccine strategy, even if the EMA no longer have any standing in the UK post Brexit,” said Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets.

Such an outcome would risk sterling falling to around US$1.3798, Stretch said.

Sterling has gained more than 4 per cent against the euro in the past three months and more than 2 per cent versus the dollar amid hopes for a relatively fast economic recovery following a speedy vaccination programme and declining numbers of Covid-19 cases in Britain.

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Also weighing on the pound, the European Union launched yesterday legal action against unilateral British changes to Northern Irish trading arrangements.

In an interview with Italian daily Il Sole 24 Ore, the governor of the Bank of England Andrew Bailey said economic growth in Britain will fall by 4 per cent in the first quarter from the same period last year and by 19 per cent compared to the first three months of 2019. — Reuters