Pound Edges Higher as UK Economic Outlook Improves on Covid-19 Vaccine News
The Pound to Euro (GBP/EUR) exchange rate rose by 0.4% this morning, with the pairing currently trading around €1.126.
Sterling’s gains have been underpinned by positive risk-sentiment this week following the announcement of a potential breakthrough in a Covid-19 vaccine.
Yesterday saw British Health Secretary Matt Hancock said the news was significant but ‘there are no guarantees’.
However, Mr Hancock added:
‘If this or any other vaccine is approved, we will be ready to begin a large-scale vaccination programme.
‘We do not yet know whether or when a vaccine is approved, but I have tasked the NHS with being ready from any date from 1 December.’
As a result, GBP traders are now more optimistic that the British economy could begin to recover in December, with a rollout of a Covid-19 vaccine now a possibility.
Meanwhile, Brexit remains in focus following Prime Minister Boris Johnson’s defeat in the House of Lords over the controversial Internal Market Bill.
Nevertheless, Downing Street has since vowed to push on despite the setback.
But with US Democrat Joe Biden now the President-elect, GBP investors are now more confident that UK-EU negotiations could be under intense pressure to secure a post-Brexit trade agreement.
Euro Remains Subdued on Weak Eurozone Economic Data
The Euro is subdued following yesterday’s release of Germany’s latest ZEW Survey of Economic Sentiment. The figure fell below forecasts from 56.1 to 29 in November.
Consequently, EUR traders are becoming more concerned about the Eurozone’s largest economy’s performance in the months ahead.
Achim Wambach, the President of the ZEW Institute, commented:
‘Financial experts are concerned about the economic impact of the second wave of Covid-19 and what this will entail.’
With the Eurozone being threatened by a possible double-dip recession this year, EUR traders are remaining cautious as the Covid-19 situation unfolds.
There are no notable Eurozone economic releases today.
Instead, single currency investors are awaiting today’s speech from Christine Lagarde, the President of the European Central Bank (ECB).
Any downbeat comments about the Eurozone’s struggling economy – or the Covid-19 situation – would drag on the Euro.
Could Sterling Head Higher on UK Growth Data Tomorrow?
Pound (GBP) investors will be awaiting tomorrow’s release of the flash UK GDP figure for the third quarter.
If this confirms forecasts and rises from -19.8% to 15.8%, then we could see Sterling head higher.
Brexit news will also remain in focus this week.
As a result, the Pound could head higher on any further signs that the UK and the EU could settle on a post-Brexit trade agreement.
Euro (EUR) traders will be eyeing tomorrow’s publication of the Eurozone’s Industrial Production figure for September.
If these point to a significant downturn in the bloc’s economy, then we would see the EUR/GBP exchange rate suffer.