EURGBP Eyes Lower Support Levels with BoE
The EURGBP exchange rate was 0.35% lower on Monday as the pair looks to secure a move to lower levels of support. The pair has been threatening to push lower for the last three sessions but has been unable to see a clear catalyst. Economic data from the Eurozone, ahead of the Bank of England on Thursday, should give the needed push.
EURGBP is trading at 0.8822 and the 0.8685 level could be in reach if sterling can build on recent gains.
European GDP and Inflation will Guide EUR to GBP
European Gross Domestic Product (GDP) figures will guide the EUR to GBP pair ahead of the Bank of England rate decision. Italian GDP is expected to show a drop of -6.7% for the year. The euro-wide figure is expected to come in at -5.4%. The International Monetary Fund (IMF) updated its GDP expectations for 2021 last week and these saw the UK outperforming the Eurozone. Spain and France are both expected to be strong, and more positive numbers from Italy would help the euro’s cause.
Inflation numbers from the Eurozone will also be released on Wednesday and this could give some insight into the European Central Bank path on policy. After being stuck at 0.2% the euro number is expected to jump to 0.9% and this would be a boost for the bank’s 2% inflation target. The bank had previously threatened intervention in the currency markets to tackle deflationary pressures.
The key event this week will be Thursday’s announcement from the Bank of England on its interest rates and monetary policy. The bank is unlikely to make any movebut the release of its latest quarterly outlook could give traders some idea of the future path for stimulus.
It’s likely that the bank will sit back for a few months as the economy grew more strongly than expected in November despite the lockdowns. The bank has said that businesses are now learning to live with the restrictions. The BoE Chief Economist Andy Haldane also talked of a rebound in the second quarter as the current vaccination program takes hold.
Sterling Still Supported by Vaccine Trends
The British pound is still seeing support from the current vaccination program. This has also aligned with problems for the Eurozone as manufacturing delays led to tension between drug makers and the EU Commission.
The UK government has administered vaccines to 80% of its over-80s and once this rolls down to the over-70 age group then the country is moving closer to reopening. The country is on track to be there ahead of other developed nations and this should keep the pound supported across the board.
The EUR to GBP has resistance at 0.8870 and the support is at 0.8658. This week’s data from the Eurozone and the BoE rate announcement should see one of these levels tested.
Get in touch to discuss these factors in further detail ahead of your upcoming euro to pound currency exchange.
The post EURGBP Eyes Lower Support Levels with BoE appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/02/eurgbp-eyes-lower-support-levels-with-boe/
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