EUR to GBP Rate Bounces as ECB Avoids New Measures
The EUR to GBP exchange rate was 0.52% higher on Friday after the European Central Bank backed away from further stimulus measures. The 0.8870 level has held yet again, after propping up price four times since June of last year.
EURGBP was trading at 0.8900 and the market will now attempt to move back into the range below 0.9175 that has dominated price for six months.
ECB meeting pours cold water on stimulus predictions
The European Central Bank announced their latest interest rate decision on Thursday and the bank kept their interest rates and stimulus measures on hold. The current levels are still at the extreme with rates at zero and stimulus at 1.95 trillion euros but markets were still looking for possible action.
Inflation figures this week highlighted that the higher euro is still pressuring prices in Germany and the Eurozone. The bank did mention they were watching the euro at this time, but have refused to sound a more aggressive tone over single currency strength.
Officials at the ECB did say that further measures were possible in the coming months in relation to the virus and this is likely as the EU countries are not moving fast in their vaccination efforts. This was dealt a blow by delays from manufacturer Pfizer, but the UK has an advantage over the Eurozone in vaccination pace. This could play into the EUR to GBP exchange rate as we move through the first quarter.
Germany proposes UK travel ban in EU
Germany’s Chancellor Angela Merkel has proposed that European governments suspend all transport links with Britain due to the virus. Mrs Merkel said the bloc required a combined approach to tackle any new strain of the virus.
Speaking to leaders in a virtual conference she said:
“We will for the first time, talk to the European heads of government and state about the mutation and we will certainly have the common goal to curb this virus, which means there will need to be special measures, I think they all agree, regarding travel from Great Britain and for example from South Africa.”
Merkel also referred to what she calls the “British virus” as EU leaders seek to agree on the latest virus measures. Further disruption in exports and air travel will have a knock-on effect to the eur v gbp exchange rate and both the UK and Eurozone are still subject to strict lockdown measures.
Next week will see unemployment figures from the UK, alongside IFO business and consumer confidence releases in Germany. Both central banks have stepped back from new stimulus and this will see the EURGBP take a pause from any big move. That could change on the virus but it appears to be going in the right direction with the ongoing vaccinations.
The post EUR to GBP Rate Bounces as ECB Avoids New Measures appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/01/eur-to-gbp-rate-bounces-as-ecb-avoids-new-measures/
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