The Pound Euro exchange rate has steadied after a rocky week after an unexpected decrease in German industrial production allowed the Pound to recover some its losses.
At the time of writing the GBP/EUR pairing are currently trading at around 1.1521, as the UK’s successful vaccine rollout had supported GBP to make decent gains, but concerns over the AstraZeneca vaccine have seen the Pound retreat.
Pound (GBP) Muted by Coronavirus Vaccine Concerns
The Pound has struggled for much of the week following on from the UK’s medical regulator suggesting that those under the age of 30 should not receive a dose of the AstraZeneca vaccine due to safety concerns.
However, the introduction of the Moderna vaccine earlier in the week across the UK has helped to limit any major losses for Sterling.
The Pound has found slight support this morning after the Halifax house price index for March showed a record high in March.
Russell Galley, managing director at Halifax commented on the new record high:
‘Following a relatively subdued start to the year, the housing market enjoyed something of a resurgence during March. Casting our minds back 12 months, few could have predicted quite how well the housing market would ride out the impact of the pandemic so far, let alone post growth of more than £1,000 per month on average.’
Euro (EUR) Falters after Sharp Decrease in German Industrial Production
The Euro has pulled back from its recent run of gains against the Pound this morning after German Industrial Production missed forecasts of 1.9% and remained in contraction.
German industrial production fell 1.6% in February, Carsten Brzeski, global head of macro at ING, commented on the fall saying:
‘February industrial data makes it hard to see how the economy could still escape a contraction in the first quarter. It would need an explosion of manufacturing and construction activity in March to prevent the German economy from falling into contraction in the first quarter of the year.’
‘The drop in industrial production is somewhat surprising, given strong orders and confidence indicators. Besides some possible and temporary supply chain disruptions, the only other explanation for the disappointing performance can be the harsh winter weather in February.’
Despite comments from the European Commission that all adults across the bloc will be offered a jab of the coronavirus vaccine by the end of June, Euro investors remain wary of the EU’s coronavirus situation after German Chancellor Angela Merkel backed a stricter lockdown across Germany.
Pound Euro Exchange Rate Outlook: Coronavirus Developments in Focus
Heading into the weekend, the Pound Euro exchange rate will continue to be driven by any further coronavirus developments.
If an uptake in the coronavirus vaccine rollout across the Eurozone is seen then the Euro could see itself heading higher at the start of next week.
Heading into next week, the latest Eurozone retail sales for February could support EUR if they meet forecasts and rise to 1%, up from January’s -5.9%.
Pound investors especially will keep an eye that England’s second stage of lockdown easing goes ahead without a hitch, the start of the reopening of the economy and the increased use of the Moderna vaccine across the UK could cause traders to head to Sterling.