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EURGBP Faces Uphill Battle After Recent Losses

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The EURGBP exchange rate came close to new lows last week, as sterling bulls pounce on recent European instability. The pair has jumped 0.12% early on Monday, but the euro faces an uphill battle to recover this year’s losses.

EURGBP trades at 0.8560 ahead of German inflation numbers on Tuesday, while unemployment will also be seen from Europe’s largest economy.

UK Moves to New Level of Reopening

The pound should see support this week as the country moves to the next level in its reopening plan.

Outdoor socialising will begin in the country with some other measures as the country takes a first step out of lockdown. The EURGBP exchange rate is being pressured by this as France extended its lockdown further, while Germany put the country on its red list. Germany itself saw Angela Merkel seeking an Easter lockdown but this was refused by state leaders and health officials, and the Chancellor was forced to back down and apologise.

The UK is still moving ahead with vaccinations as a reported 30 million have received the shot in the country and this should remove some of the vaccine export tensions that we saw last week. As England moves to reopen, the surge in cases abroad is a risk to the potential for foreign holidays in the near-term and this would boost sterling with a larger bout of domestic spending as the reopening extends.

News yesterday said that Britain could offer Ireland 3.7 million vaccines in an effort to get Northern Ireland out of lockdown. The Sunday Times said, “outline discussions” had been made, although the move would likely upset the EU.

Stricken Suez Ship Ignored by Markets

The stricken cargo ship in the Suez Canal is still under attempts to be freed and markets are ignoring the risks with over 300 ships waiting to cross the canal.

One of the risk sectors is said to semiconductor supplies, which could impact electrical goods, but there was said to be live animals in some of the tankers, while manufacturing supplies could be restricted. Markets are ignoring the risks at the moment but there may be some knock-on effects for countries as tanker rates have soared and the EU was facing delays to LNG supplies.

The week ahead will see German inflation on Tuesday, with unemployment from the country released the following day. European inflation numbers will complete the bill and markets have backed off from the recent bond market panic as numbers out of Britain cooled on retailer pricing. Any initial inflation increases would be tackled by central banks so traders are unlikely to act until we see a stronger move higher and once the economies are out of lockdown, we could see that happening.

EURGBP came within a few pips of the 2021 lows on Friday and needs more than a weak Monday bounce to get it back on a stronger footing. With the UK moving to a relaxing of rules, the downtrend should remain in place.

Get in touch to be kept up to date on the latest market movements so you can make informed decisions about when to trade.

The post EURGBP Faces Uphill Battle After Recent Losses appeared first on Euro Rate Forecast.



Source: https://www.eurorateforecast.com/2021/03/eurgbp-faces-uphill-battle-after-recent-losses/


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