EURGBP Pounces on European Troubles

The EURGBP exchange rate was 0.12% lower on Wednesday as the pair took advantage of some troubles in the Eurozone. Bearish traders placed their bets after the Italian Prime Minister Giuseppe Conte resigned, while the EU faced further scrutiny over its vaccination program.

The EURGBP was trading at 0.8840 and the move below this key level could see the pair finally breaking out of a seven month range.

EU Vaccine Plan Faces Criticism, Italian PM Resigns

The GBP to EUR exchange rate outlook is taking advantage of the EU’s ongoing issues with its coronavirus vaccine rollout. News on Monday saw AstraZeneca announcing delays to vaccine delivery in the EU. This was another blow for the union after Pfizer had also announced delays to shipments in previous weeks.

The European Union has been criticized for its handling of the virus in recent months as the rollout has struggled to get off the ground. The bloc has been under pressure for not ordering enough vaccines and this is slowing their ability to reopen the economy.

The Anglo-Swedish Drug maker AstraZeneca rejected blame and European threats, saying the bloc must take responsibility for the vaccine delays.

EU governments will hold a meeting with company executives on Wednesday and the European Commission is seeking “fundamental” information about the progress for delivery in first half of 2020. The issue raises the possibility that the UK will see its economy open before the EU and this will be a big factor in the EUR to GBP exchange rate outlook.

Italy’s government is adding to tension in Europe with the resignation of Prime Minister Conte. Conte’s move is seen as a political move that will see him stay in power, but it comes at a time when ministers should be focusing on the virus.

Conte was a political outsider who has no political party of his own and he will try to recruit a new coalition. Investors will be seeking stability and if he is ousted and replaced then it could lead to bond yield issues for the country.

German Inflation Data Up Next

German consumer confidence data this morning was lower than expected with a reading of -15.6, compared to expectations for -7.9. The numbers are a result of the ongoing lockdowns in the country, but the UK is in the same boat with struggles in the retail sector and jobs market.

The next data release for the European economy is the inflation numbers tomorrow. Analysts are expecting a bounce out of deflationary territory for the German economy and this would be a boost for the European Central Bank, who were unhappy with deflationary trends in the Eurozone.

A disappointing inflation number would add to the current woes and see the EUR to GBP rate suffer on the vaccine delays and the Italian leadership confusion.

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