GBP/EUR Exchange Rate Falls on Lack of Influential UK Economic Data
The Pound Euro (GBP/EUR) exchange rate fell by -0.4% today as Sterling investors turn their eyes towards Thursday’s monetary policy announcement from the Bank of England (BoE). The pairing is currently fluctuating around €1.15.
Yesterday saw the GBP/EUR exchange rate rise after Andrew Bailey, the BoE’s Governor, said he was ‘more positive’ about the outlook for the UK’s economic recovery.
However, because of a lack of influential UK economic data and escalating tensions between the UK and EU over the AstraZeneca vaccine.
The vaccine has been suspended in France, Italy, and Germany, over concerns over blood clot reports.
Consequently, this has knocked down the Pound’s strength against the single currency.
Prof Anthony Harden, the Joint Committee on Vaccination and Immunisation (JCVI) deputy chair, commented:
‘The UK has administered 11m doses of the AstraZeneca vaccine and there has been no demonstrable difference in the number of blood clots since the vaccine was introduce.’
Nevertheless, UK markets are remaining cautious despite the BoE’s reassurance that the nation’s economic recovery could be quicker than previously forecast.
Euro (EUR) Edges Higher Despite Europe’s Fears Over a Third Wave of Covid-19
The Euro (EUR) rose against a weaker Sterling today despite growing concerns that the European Union (EU) could be facing imminent lockdowns as a third wave of Covid-19 bites the continent.
Germany’s Health Minister warned that Germany – the Eurozone’s largest economy – was now in for ‘several very challenging week’s as cases of the virus increase.
In Eurozone economic news, today saw the release of the latest French Consumer Price Index for February. The figure confirmed consensus and remained flat at 0% month-on-month.
Coming up, EUR traders will be monitoring the latest Eurozone ZEW Survey of Economic Sentiment in March.
If this confirms forecasts and falls from 69.6 to 65.1, then we could see the EUR/GBP exchange rate begin to struggle as the outlook for the Eurozone’s economy deteriorates.
ING’s Senior Economist Bert Colijn was dovish about the Eurozone’s economy, saying:
‘With extended lockdowns and a slow start to vaccinations, the eurozone economy has got off to a disappointing start to 2021 and it’s expected to contract again for the first quarter, with many countries still having a lot of restrictions in place to curb the spread of the virus. Recovery should start quickly from the second quarter. But countries such as the Netherlands and Germany are closer to their pre-pandemic levels of economic output than others such as Italy and Spain.’
GBP/EUR Forecast: Could a Dimming Outlook for the Eurozone’s Economy Drag Down the Single Currency
Euro (EUR) traders will be awaiting tomorrow’s release of the Eurozone’s CPI data for February.
Any signs of inflation reflecting the Eurozone’s struggling economy would be EUR-negative.
Tomorrow will also see the release of the Eurozone’s Construction Output data for January.
If this paints a grim outlook for the bloc’s construction sector at the beginning of this year, then the EUR/GBP exchange rate would suffer.
However, we could see the GBP/EUR exchange rate begin to claw back some of today’s losses if the outlook for the UK’s economic situation continues to improve.