The Pound to Euro (GBP/EUR) exchange rate is trading at its best levels since the start of the coronavirus pandemic, amidst hopes for a swift reopening of the UK economy.
What’s Been Happening: Pound Surges on UK Economic Optimism
The Pound roared higher through last week’s session, with the GBP/EUR exchange rate surging to an 11-month high amidst growing optimism over the reopening of the UK economy.
This optimism was underpinned by the UK’s continued success in its vaccination rollout, as well as some encouraging coronavirus statistics highlighting a sharp drop in new cases and hospitalisations.
Aiding the Pound’s ascent in the latter half of the week were reports that Chancellor Rishi Sunak will defer plans for tax increases in next month’s Budget, as well as a stronger-than-expected UK services PMI.
Meanwhile, after putting up a fight at the start of the week on the back of better-than-expected GDP estimate from the Eurozone and upbeat German economic sentiment, the Euro found its self on the defensive through most of the session as a result of a buoyant US Dollar as well as the EU’s vaccination failings.
Three Things to Watch Out for This Week
- Boris Johnson’s Lockdown Easing Plan
The main catalyst in the Pound this week will undoubtedly be on the unveiling of Boris Johnson’s plan on how to start easing lockdown measures in England, with Sterling likely to extend its recent rally if the PM’s roadmap inspires further confidence in the UK’s economic recovery.
- UK Jobs Report
Also influencing GBP exchange rates this week will be the publication of the UK’s latest employment figures. Will a sharp bump in wage growth help to offset an expected rise in unemployment in December?
- German GDP
For EUR investors the focus this week will be on Germany’s latest GDP figures, which could buoy the Euro as they are expected to confirm the Eurozone’s largest economy avoided a contraction of growth at the end of 2020.
Should UK coronavirus developments remain broadly positive, and the EU’s vaccination rollout continue to disappoint there is a strong chance we could see the GBP/EUR exchange rate text new highs this week.