Pound Euro Exchange Rate Jumps as UK Covid Cases Fall
(Updated 9:15, 28/7/21) The Pound Euro exchange rate jumped yesterday afternoon, hitting a new 12-day high, as the UK reported the seventh consecutive day of falling Covid cases.
GBP investors were cheered by the news, despite Boris Johnson and senior scientists sounding a note of caution, as the impact of the 19 July unlocking is not yet seen in the data.
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Pound Euro Exchange Rate Drops on NI Protocol Dispute
The Pound Euro (GBP/EUR) exchange rate has retreated from a ten-day high today, as the ongoing dispute over the Northern Ireland protocol undermined the UK’s impressive retail sales figures.
The single currency, meanwhile, has been buoyed by the EU’s vaccination progress, with 70% of adults in the bloc now having had at least one dose.
Pound (GBP) Undermined by Brexit Concerns
The Pound (GBP) has softened against the Euro (EUR) today, despite impressive UK retail sales in July.
The Confederation of British Industry’s (CBI) latest distributive trades survey printed at 23, above expectations of 21 and just shy of last month’s three-year high of 25.
Ben Jones, principal economist at the CBI, said:
‘Consumer demand continues to support the UK’s economic recovery. Retail sales have been at or above seasonal norms for the last four months now’.
However, stock and staffing fears may have tempered the optimistic outlook. Jones added that while demand remains strong, operational issues are worsening:
‘Relative stock levels are at a record low and expected to fall further still, while the number one worry for many firms at the minute is labour shortages throughout the supply chain as staff self-isolate.’
While the CBI release was broadly upbeat, the Pound has dipped against the Euro, potentially weighed down by the ongoing Brexit disagreement over the Northern Ireland protocol.
Last night Boris Johnson rejected new proposals by Brussels on how to resolve the dispute, instead preferring a complete renegotiation of the agreement he signed in December 2020.
Threats of legal action and fears of a trade war have dented the Pound in months past, so renewed tensions may be dragging on GBP today.
Euro (EUR) Climbs on Vaccine Optimism
Meanwhile the Euro has strengthened against Sterling, as progress in the bloc’s vaccination programme has raised hopes of a post-pandemic recovery.
In a speech today European Commission president Ursula von der Leyen announced that the EU has hit its target for giving 70% of adults at least one dose of the Covid-19 vaccine.
The EU’s initial vaccine rollout was sluggish, but the new vaccination rate shows that the bloc has caught up with others.
The news comes as reported daily cases in the European Union dropped for the first time since the latest spike began, one month ago. This raises hopes that the EU will be able to get the Delta variant of the virus under control, boosting EUR exchange rates.
Pound Euro Exchange Rate Forecast: GBP/EUR Open to Losses amid Lack of Data
Tomorrow, the latest consumer confidence figures from Germany and France could boost the Euro, as both are expected to rise.
Meanwhile, the Pound may be vulnerable to further losses as there are no major UK data releases to support it.
Covid headlines could also affect both currencies, with the UK and the Eurozone seeming to make progress against the virus in recent days.
GBP investors will also be watching how the EU responds to the UK’s rejection of its Northern Ireland protocol proposals. If the EU strikes an aggressive tone, the Pound Euro exchange rate could suffer.