GBP/EUR Trading in Narrow Range as Coronavirus Remains Dominant
The Pound Euro (GBP/EUR) exchange rate is directionless in the beginning of today’s session as coronavirus case numbers plateau in the UK but remain high in Europe.
At the time of writing, the GBP/EUR exchange rate is trading at approximately €1.1976, with minimal market movement.
Pound (GBP) Rangebound Despite Decrease in Coronavirus Case Numbers
The Pound (GBP) is muted against the Euro (EUR) at the beginning of today’s session, in spite of reaching the lowest daily level of UK coronavirus case numbers since 15th December 2021.
Last week, the number of hospital admissions dropped, showing a week-on-week fall, and a decline in reported infections of the Omicron variant since the beginning of the new year.
Professor Julian Hiscox, chairman in infection and global health at the University of Liverpool, said:
‘We’re almost there, it is now the beginning of the end, at least in the UK. I think life in 2022 will be almost back to before the pandemic.’
From this week, individuals with a negative PRC test is only required to isolate for 5 days, down from the previous 7.
This is a positive step to nearing the end of the pandemic in the UK which will, in turn, increase economic activity and lift Sterling’s potential.
However, the number of deaths reported following a positive test continues to rise, with a 45% increase from the previous fortnight.
Meanwhile, ‘Operation: Save Big Dog’ has been reportedly circulating Parliament in a bid to prevent Boris Johnson, the UK Prime Minister, from losing his position as he’s under scrutiny regarding parties at Downing Street during the 2020 lockdown.
Johnson and his team are asking for ‘patience’ though, as Sue Gray investigates the allegations.
Although this may be limiting GBP’s appeal, it is unlikely to cause too much pressure as the government policies won’t alter immediately, should Johnson be replaced.
Euro (EUR) Directionless as Omicron Drives Eurozone Infections
Meanwhile, the Euro is trading flat against the Pound as the Omicron variant remains a threat to parts of the Eurozone.
The Eurozone is currently responsible for half of the global number of infections and deaths.
This is weighing on the single currency due to economic disruption caused by restrictions and staff shortages, as well as a struggling healthcare system in response to high numbers of hospital admissions.
However, some experts are optimistic that the high case numbers have peaked.
Last week, Hans Kluge, the World Health Organization’s Europe director and Tanja Stadler, head of Switzerland’s COVID-19 science task force, were hopeful that case numbers would soon drop.
Kluge said:
‘We see a number of places where the peak is being reached or has been reached. It may be a bit earlier than anticipated, but remember the region is very diverse.’
Stadler said:
‘We could get to the peak within the next two weeks if contacts among people stay on the same level. If people are more cautious, it will take longer.’
GBP/EUR Exchange Rate Forecast: Will UK Employment Data Impact GBP?
Looking ahead, the Pound Euro exchange rate is likely to be influenced by data scheduled for release throughout the week.
Sterling may be impacted by November’s unemployment rate which is currently forecast to remain unchanged at 4.2%.
However, the Bank of England (BoE)’s rate hike bets continue to steer GBP’s potential, as UK wage growth, forecast to decline from 4.9% to 4.2%, becomes entrenched in interest rates.
The single currency is likely to be influenced by speeches from European Central Bank (ECB) policymakers, as well as President, Christine Lagarde, throughout the week’s session.
Moreover, the ECB monetary policy meetings accounts may also impact EUR.
Additionally, the Pound Euro exchange rate may also be influenced by the ongoing coronavirus situation and the return of Brexit negotiations.