Pound Euro Exchange Rate Struggles as Sterling Rally Slows
Despite hitting a fresh yearly high near the beginning of the week, the Pound Euro (GBP/EUR) exchange rate has seen more mixed movement since then. The Pound (GBP) has been struggling to capitalise on Euro (EUR) weakness as its rally runs out of steam.
Last week saw the Pound jump, pulling GBP/EUR from the level of 1.16 to open this week around the interbank level of 1.17.
On Monday, GBP/EUR touched on a new yearly high. This was the best level for GBP/EUR since the beginning of 2020. However since then, GBP/EUR has slipped slightly and trends just above the week’s opening levels at the time of writing.
Investors are now awaiting tomorrow’s manufacturing PMIs and German retail data. Surprising coronavirus pandemic developments could also influence Pound to Euro exchange rate movement.
Pound (GBP) Exchange Rates Fail to Find Drive in Forecast-Beating UK Growth
This morning saw the publication of Britain’s final Q4 2020 growth rate results. The data generally beat expectations, coming in at 1.3% quarter-on-quarter and –7.3% year-on-year.
However, as the figures were still fairly gloomy overall, they didn’t have much of an impact on the Pound’s movement today.
Sterling’s movement has been softening this week, as it runs out of bullishness after weeks of gains. It has struggled to sustain strong gains even against a weak Euro.
Euro (EUR) Exchange Rates Lack Drive as Coronavirus Fears Weigh
The Eurozone continues to struggle with the coronavirus pandemic more than other major economies such as the UK and US, which are both showing stronger signs of economic recovery.
The bloc’s coronavirus vaccine rollout has seen complications, and France and Germany are expected to see stricter restrictions as infections rise in those key economies.
On top of this, the European Central Bank (ECB) is unlikely to have any reason to become less dovish any time soon. According to Analysts at ING:
‘The ECB has already made clear it will look through the spike in inflation, a result of supply-side shocks and one-off factors. It has underscored that point by stepping up its PEPP purchases for three months at the most recent policy setting meeting,’
Pound Euro (GBP/EUR) Exchange Rate Awaits Manufacturing PMIs and German Retail Report
Most of the week’s most notable UK and Eurozone ecostats have been published now, but some major figures are still expected tomorrow.
Thursday’s European session will see the publication of Markit’s final March manufacturing PMI results from the Eurozone and UK.
Germany’s key February retail sales results are also due for publication.
If German manufacturing and retail beat forecasts, they could boost the Euro’s appeal considerably through the end of the week. On the other hand, poor Eurozone data could lead to deeper Euro weakness and make it easier for GBP/EUR to advance.
While the Pound’s rallies are running out of steam lately, some strong UK manufacturing data could make it easier for the Pound Euro (GBP/EUR) exchange rate to hold its ground through the end of the week.