The Pound to Euro exchange rate found itself rangebound this morning as yesterday’s Bank of England (BoE) downplay talks of negative interest rates, though the pair is consolidating at an 8 month high.
At the time of writing the pairing is currently trading at around 1.1438.
Pound (GBP) Pushes Higher as Covid-19 Vaccination Rollout Continues
The Pound pushed higher today, as announced yesterday, BoE interest rates will be unchanged at 0.1% and any talks of negative interest rates were all but taken off the table, for now.
Based on the UK’s vaccination success, the BoE said yesterday that:
‘GDP is projected to recover rapidly towards pre-COVID levels over 2021, as the vaccination programme is assumed to lead to an easing of COVID-related restrictions and people’s health concerns.’
BoE Governor Andrew Bailey added:
‘COVID vaccination programmes have begun in a number of countries, including the UK, which has improved the economic outlook.’
‘Nevertheless, recent activity has been affected by an increase in COVID cases, including from newly identified strains of the virus, and the associated reimposition of restrictions.’
The UK continues to deploy its so far successful vaccination programme with over 10 million people having received their first jab, causing investors to become increasingly optimistic that the UK will reach its target, and will be able to begin easing of lockdown restrictions as soon as possible.
Euro (EUR) Struggles as German Factory Orders Disappoint
The Euro struggled for any sort of gains this morning as factory orders from the Eurozone’s largest economy, Germany, fell short of forecasts.
Factory orders in Germany plunged to -1.9 in December of 2020, it is the first decline in new factory orders since a record slump in April during the first wave of the coronavirus pandemic and worse than market forecasts of a 1 percent drop.
The Eurozone continues to struggle against its coronavirus situation, as the bloc is on course for a double-dip recession and investors become increasingly jittery over the state of the blocs economy.
It is expected that the Eurozone GDP will continue to shrink as lockdowns are continually extended or tightened.
Pound to Euro Outlook: Governor Andrew Bailey Speech in Focus
Pound investors will be looking to this afternoon’s BoE speech from Governor Andrew Bailey.
Any dovish commentary from Governor Bailey regarding the UK economy would cause GBP to struggle.
Euro traders will keep an eye on German Industrial Production data released on Monday, which is forecast to show a contraction in productivity, which could cause the Euro to suffer.
The GBP/EUR exchange rate will continue to be driven by any coronavirus developments, with the continued success of the UK vaccination rollout proving positive for Sterling.