Pound to Euro Exchange Rate Rangebound as Outlook for Eurozone Economy Remains Uncertain
The Pound to Euro exchange rate is rangebound this morning. The pairing is currently fluctuating around €1.14.
The Euro struggled to gain against Sterling today despite the publication of the finalized German inflation figures confirming forecasts in January and rising by 0.8%.
Annualized figures also confirmed consensus, rising by 1.6% last month as food prices rose by 2.2% compared with January 2020.
However, today also saw the release of the French industrial production figure for December, which fell by -0.8%.
Maria Martinez, an analyst at MarketWatch, commented:
‘French industrial production fell for the second consecutive month in December, putting a stop to the recovery from the coronavirus-driven drop recorded in the spring.’
As a result, EUR traders are remaining cautious as the outlook for the Eurozone’s economy is uncertain.
The single currency is also suffering from positive risk-on market mood which is limiting the appeal of the safe-haven currency.
Pound Steady as UK’s Speedy Covid Vaccine Rollout Boosts UK Market Mood
GBP held steady today owing to a lack of notable UK economic data. However, the UK’s speedy Covid-19 vaccine rollout has given a boost to the Pound.
Jane Foley, head of currency strategy at Rabobank, explains:
‘GBP bulls have been flexing their muscles since the start of the year based on relief about the EU/UK trade deal and on hopes that the relatively rapid vaccine roll-out programme will lead to a fairly fast economic recovery this year.’
As a result, Pound investors are becoming confident that the coronavirus vaccine rollout – which has risen to 18.9% of the population receiving at least one vaccine does – will help the British economy’s recovery process in the months ahead.
Today also saw daily UK Covid-19 cases fall by -4,476 compared to last month.
Meanwhile, UK markets will be awaiting the speech from the Bank of England’s Governor, Andrew Bailey, later today.
Any bullish comments about the outlook for Britain’s economy would boost the GBP/EUR exchange rate.
GBP/EUR Forecast: Could a Dovish ECB Drag Down the Single Currency?
Euro traders will be awaiting tomorrow’s speech from the European Central Bank’s (ECB) Vice-President, Luis De Guindos.
Any comments that point to a significant downturn in the Eurozone’s economy in the months ahead would be EUR-negative.
Pound investors will be looking ahead to January’s UK RICS Housing Price Balance. Any improvement in the outlook for the UK’s housing market would boost Sterling.
The GBP/EUR exchange rate will continue to be affected by the UK’s Covid-19 situation.
If the UK’s Covid-19 vaccine rollout promises a steady recovery for the nation’s economy in the months ahead, then Sterling would head higher.