The Pound Euro (GBP/EUR) exchange rate struck higher last week, after the single currency was knocked by the Eurozone’s latest GDP figures.
What’s Been Happening: Euro Undermined by GDP Contraction.
The Euro stumbled out of the gates last week, in response to a weaker-than-expected business confidence reading from Germany.
The Euro mounted a brief recovery in mid-week trade following some optimistic comments from European Central Bank (ECB) President Christine Lagarde.
However, the single currency then faced renewed pressure at the end of the week following the publication of the Eurozone’s latest GDP figures. While these revealed a smaller-than-expected contraction of growth in the first quarter of 2021, it still confirmed the bloc slipped into a double-dip recession over the winter, weakening the Euro.
The Pound, meanwhile, opened the week on some strong footing amidst growing hopes for a strong rebound in the UK economy this year and a strong retail sales index.
However, Sterling faced some volatility through the latter half of the week, as Boris Johnson came under increased scrutiny over the ‘cash for curtains’ scandal and accusations of government sleaze.
Three Things to Watch Out for This Week
- BoE Rate Decision
Acting as the main catalyst of movement in the Pound this week will be the Bank of England’s (BoE) latest policy meeting. No policy changes are expected this month, but an upgrade to the bank’s growth forecasts could help bolster Sterling.
- Scottish Election
Also influencing GBP exchange rates this week will be the outcome of the latest Scottish Parliamentary election, amidst concerns the SNP could push forward with an ‘illegal’ independence referendum if it wins another majority.
- German Industrial Data
In focus for EUR investors this week will be Germany’s latest industrial releases, with the Euro potentially receiving some support if factory orders and production expanded as expected in March.
Pound Euro Forecast
Looking ahead, the Pound Euro exchange rate could strike higher this week, assuming the BoE upgrades its annual growth forecasts in light of the UK’s boom in consumer spending since the reopening of non-essential retail.