The GBPEUR exchange rate is 0.13% lower in early trading on Thursday after yesterday’s UK inflation figures printed higher than expected. The pair punched through the 1.15 resistance level on Wednesday, but traders are cautious ahead of Boris Johnson’s “roadmap” outline for reopening on Monday.
GBP to EUR is trading at 1.1498 and will likely hover around this level until more clarity is given by Downing Street.
Downing Street Plans a “staged” Opening
Boris Johnson has vowed to free the UK from his latest lockdown in “stages,” which will be based on “data, not dates,” according to the Prime Minister. Johnson suggested that a “cautious, prudent” approach would ensure that the country’s reopening is “irreversible”. As expected, he also hinted that pubs and restaurants will be the last businesses to reopen.
Johnson said: “Last year we opened up hospitality fully as one of the last things we did because there is obviously an extra risk of transmission.”
His cautious and prudent statements saw him accused of “moving the goalposts” on Monday, despite the fact that Downing Street claims 15 million of the population have now received a first dose of the vaccine.
The GBP to EUR exchange rate outlook has seen the pound advance this year after the Brexit risk premium was removed and the country started to see improvements in inflation and GDP. The key driver of sterling has been the pace of vaccinations and Johnson needs to ensure that he doesn’t slow the country’s recovery path on Monday with an over-cautious approach. The exchange rate could see consolidation into that event.
Barnier Warns of French Exit Risk
The EU’s Chief negotiator during Brexit, Michel Barnier, has warned Emmanuel Macron that France could be the next country to leave the bloc.
“We must take a little time to understand why Brexit happened. In many poor or troubled parts of the UK, the industry has disappeared, and that also happens here. There are fewer public services, the feeling of not being protected. This is a popular feeling that I recommend listening to.”
In his surprising criticism of the EU, Mr Barnier also said Brussels had been ignorant to the rise of Euroscepticism and hinted at a return to politics after being freed from EU duties.
It wouldn’t be a surprise to see Barnier entering the French political race next year in light of Mario Draghi’s move into the Italian Prime Minister role.
Right-leaning candidate Marine Le Pen will be in the frame once more and Macron could face headwinds after two years of yellow vest protests and lockdowns.
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