EURGBP Hovers at Ten Month Lows Before Data
The EURGBP exchange rate is still trading near the May 2020 lows of 0.8685 as the market awaits economic data from the Eurozone and UK. Boris Johnson has addressed the lockdown removal but there is no real clarity ahead of his speech on Monday.
EURGBP is trading lower by -0.05% at 0.8720 as Eurozone GDP figures are released this morning.
Eurozone Trade Balance Boost Fails to Boost Currency The Eurozone was boosted by an improvement in the bloc’s trade balance. The market expected a reading of 25.3bn euros, but the reading came in at 29.2bn. In a separate reading, Poland’s central bank noted that the country had a record-high GDP surplus of 3.6% for 2020. The figures highlight that the Euro economy has seen trade largely unaffected by the lockdowns, but the euro to pound exchange rate is looking at the bigger picture of the services economy. The current focus for investors is the pace of reopening and the UK has an advantage after delivering 15 million first doses of the vaccine to 25% of its population. Despite this, the Prime Minister is dragging his heels and was accused of “moving the goalposts” with a hesitant speech on Monday that focused on “very low” levels of cases. Industrial production in the eurozone showed a larger than expected contraction with a reading of -0.8% compared to the expected -0.3% figure. Manufacturing and industrials have been weighed down by the lockdowns and the British construction industry was weak this month.
GDP and Sentiment Will Drive the EURGBP
The key European data for the week is today’s GDP growth figures and this could have an effect on the EURGBP rate as traders compare the growth prospects of the UK against Europe.
The fourth quarter GDP figures are expected to show a year-on-year drop of 5.1%, with a quarterly drop of -0.7%. The UK in contrast saw a quarterly reading that was 1% and double the market expectations and this could hamper the euro to pound exchange rate if the UK opens in March. The Bank of England has talked of £12bn in “pent up” savings in households and a March 4th budget on could inspire confidence in businesses to hire and spend. Dutch GDP figures were worse than expected and this could weigh on confidence in the overall number, but France and Spain saw improvements recently.
Tuesday will also see the release of ZEW economic sentiment index readings for Europe and Germany. The sentiment indices haven’t had a big effect on markets due to the lockdowns and investors will focus on the GDP, alongside the UK inflation reading tomorrow.
The EURGBP pair is likely to test the May 2020 lows this week if the economic data favours the pound, get in touch ahead of this data release to discuss your upcoming currency exchange in advance.
The post EURGBP Hovers at Ten Month Lows Before Data appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/02/eurgbp-hovers-at-ten-month-lows-before-data/
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