EURGBP Crawls Off Lows with ECB and UK GDP Coming

The EURGBP exchange rate was 0.25% higher on Thursday as the pair attempts to rebound from a drift towards the 2021 lows. Data in the next two days will help to determine the euro v pound rate outlook with an ECB rate meeting and UK GDP update.

EURGBP will likely be driven more by the ECB after upbeat comments on the UK this week.

UK GDP Update Due but OECD Predicted a Brighter Future

The UK will see the latest update for GDP growth tomorrow and the figures for January may help to spur pound gains, but this week has seen the OECD predicting a better year.

The Organisation for Economic Cooperation and Development (OECD) raised its growth forecast for the UK to 5.1% for 2021, which was 09% higher, while Germany was downgraded by 0.7%. The GDP figures tomorrow may help to align with this prediction and lower figure would boost the euro as it seeks to rebound.

The UK is seeing its currency advance on the vaccine rollout and this is helping to upgrade growth prospects. The EU is still stumbling through its own rollout and the bloc are still getting nasty with members now blaming the UK for their botched program, while former PM Tony Blair said Brexit was to blame for the EU’s vaccination woes.

US Prices cool in a Boost for the ECB

The European Central Bank were boosted by the latest inflation figures in the US which showed a drop on the monthly number by 0.1%.

Investors were panicked about the inflation threat recently and this was a closely watched number. The ECB would’ve been under pressure to act if the US number led to further bond-selling but that has now receded. The ECB are unlikely to make any changes to interest rates, but they may extend their bond purchase program and make comments to ward off bond traders that want to sell.

Any extension to the bond buying could see some pound gains but this has maybe been priced into the recent pound rally, which has the exchange rate near the 2021 lows.

If the ECB take little action then the euro could get a rally from the recent lows and that would allow the currency some time for the vaccination program to be completed in European nations. Figures this week saw the US and UK having administered much higher figures than the likes of Germany and France, which is hampering the growth outlook for the euro.

EURGBP trades at 0.8578 and today’s bounce will depend on the ECB announcement and press conference this afternoon. Use the form below to get in touch and discuss these factors in further detail and the likely implications on your currency exchange.

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