GBP/EUR Exchange Rate Rises on Boris Johnson’s Confident Comments about UK Summer
The Pound to Euro exchange rate rose today after UK Prime Minister Boris Johnson promised an ‘incomparably better’ summer after Covid-19 lockdowns were eased. The pairing currently fluctuating around €1.15.
The Prime Minister said:
‘The end really is in sight, and a wretched year will give way to a spring and a summer that will be very different and incomparably better than the picture we see around us today.’
As a result, GBP investors are feeling more confident about the UK’s economic recovery in the months ahead.
However, today saw the release of the latest UK ILO Unemployment Rate report for December, which confirmed consensus and rose by 5.1% – its highest in nearly five-years.
Minister for Employment Mims Davies MP was more optimistic about the data, saying:
‘With the Prime Minister setting out the roadmap to cautiously ease lockdown and the vaccine rollout protecting millions of people, we’re looking ahead to our recovery – our Plan for Jobs is creating new opportunities, boosting skills, and delivering a package of support for people of all ages, getting Brits back into work as we push to build back better.’
Following yesterday’s outlook of the UK Government’s lockdown exit plan, demand for Sterling is expected to increase.
Euro (EUR) Struggles Despite an Upbeat European Central Bank
The Euro struggled against the Pound today following the publication of the latest Eurozone Core Consumer Price Index for January. Last month’s inflation data confirmed consensus and fell by -0.5% month-on-month.
Carsten Brzeski, Global Head of Marco at ING, commented:
‘As eurozone inflation is on the rise, staying on the side-lines has become less comfortable for the European Central Bank. Instead, expect a further shift towards (real) yield curve control.
‘Looking ahead, for eurozone inflation, the only way is up. In fact, there will be a series of one-off factors pushing up headline inflation. In the short run, it will mainly by higher energy prices driving this. But when economies reopen, price mark-ups in sectors most hit by the lockdowns will also add to upward pressure on inflation.’
After the European Central Bank (ECB) President Christine Lagarde seemed optimistic about the bank’s plan to stabilise the economy, however, EUR investors are becoming more confident in their outlook for the Eurozone’s economy.
However, EUR traders are remaining cautious ahead of tomorrow’s publication of the latest GDP data for Germany, the Eurozone’s powerhouse economy.
GBP/EUR Exchange Rate Forecast: Could a Bullish Bank of England Boost the Pound?
We could see the EUR/GBP exchange rate struggle tomorrow if Germany’s GDP paints a grim picture of the outlook for the Eurozone’s economy. Any signs that the Eurozone’s largest economy is struggling would be EUR-negative.
Tomorrow will also see the release of the French Business Climate in Manufacturing report for February. If this increases, however, we could see the single currency edge higher.
Pound traders will be monitoring tomorrow’s Bank of England’s (BoE) Monetary Policy Report Hearings. If the BoE takes up a bullish tone about the outlook for the UK’s economy then the GBP/EUR exchange rate will continue to head higher.