GBP/EUR Exchange Rate Rises as Outlook for UK Economy Improves
The Pound Euro exchange rate rose today following the publication of the final UK GDP figure for February, which fell below forecasts but rose by 0.4%. The pairing is currently fluctuating around €1.15.
Sterling benefited from the figure, which shows a modest growth in the UK economy in February. However, the figure remains well below its pre-pandemic peak due to the third-Covid-19 lockdown.
The Office for National Statistics (ONS) also commented on the data:
‘The economy showed some improvement in February after the large falls seen at the start of the year but remains around 8% below its pre-pandemic level.’
UK exports to the European Union (EU) also showed a partial rebound in February, buoying confidence that relations between the two could be improving.
However, the GBP/EUR exchange rate has benefited from growing confidence in the UK economy now that non-essential shops have reopened.
Euro (EUR) Falls as Germany Battles with Third-Wave of Covid-19
The Euro (EUR) failed to rise against the Pound (GBP) today following the release of Germany’s latest ZEW Survey of Economic Sentiment for April.
The figure fell below forecasts from 76.6 to 70.7.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, commented on the report:
‘These data are in line with the Sentix reported earlier. The further increase in expectations is consistent with market pricing reflecting a reality in which the virus is history and economic activity is quickly moving towards pre-virus level. In this context, the sub-par vaccination effort isn’t a huge challenge for the overall trend – Germany and the EU will get there in the end – and remember also that the pace of vaccination has accelerated significantly in the past month.’
However, with the Eurozone’s key economies suffering from a third-wave of Covid-19, EUR investors are becoming increasingly more cautious about the outlook for the bloc’s economy.
German Chancellor Angela Merkel is also preparing to take control of Germany’s Covid-19 situation.
Her spokesperson said:
‘Germany is in the middle of a third wave, so the federal government and the states have agreed to add to the national legislation.’
Pound Euro Exchange Rate Forecast: Could a Bullish Bank of England Further Boost Sterling?
Euro (EUR) investors will be awaiting tomorrow’s speech from the European Central Bank’s (ECB) Christine Lagarde.
Any downbeat commentary about the outlook for the Eurozone economy could spell further weakness for the single currency.
Tomorrow will also see the release of the Eurozone’s Industrial Production figure for February. If this shows any further signs of deterioration, then this would prove EUR-negative.
Pound (GBP) traders will be eyeing tomorrow’s speech from the Bank of England’s (BoE) Jonathan Haskel, a member of the Bank’s Monetary Policy Committee.
If he is notably bullish about the outlook for the UK economy, then the Pound Euro exchange rate would rise.