EURGBP Near Yearly Lows After Growth Data
The EURGBP exchange rate saw its lowest price close of the year yesterday at 0.8523. The pair saw a flash low of 0.8505 on Monday and the British Pound is now trying to assert further dominance with some key data ahead on the data, including German unemployment figures.
Boris Johnson has been pressure to reopen the economy more quickly and a decision to do so would light a fire under sterling.
To open or not to open
A new survey from the Office of National Statistics has said that over 54% of the country should now be immune to the coronavirus due to antibodies in the vaccine. The Prime Minister came under pressure from a group of 40 MPs to reopen the British economy more quickly and boost the beaten-down sectors of the economy.
Boris Johnson’s roadmap for the economy stressed a recovery that was based on “data, not dates” and this has been met with the vaccination speed outpacing expectations. The vulnerable age groups have been vaccinated and that should also meet his requirements, but unfortunately UK health officials prefer to warn of a third wave.
The UK should grasp the opportunity to reopen its economy more quickly and storm ahead of other nations in its economic growth, or it will waste an opportunity. A faster reopening would also see the EUR to GBP exchange rate revalued lower and further repair some of the Brexit premium that was added to the euro.
UK GDP shows improvement
The final release of UK GDP for the fourth quarter came in at -7.3% compared to the expected -7.8%. Markets were hopeful of a slight improvement due to recent updates for the pace in 2021. The exchange rate is being priced on the forward path of the reopening and the pound is seeing strength.
German unemployment figures will be the next release and markets forecasting a drop of -3k jobs, following last month’s addition of 9k jobs. Last month’s jobs number outperformed the analysts’ expectations and there is a chance that the country can beat again. Germany’s unemployment rate is currently 6% and an improvement could see some gains in the euro, but the latest virus surge has added gloom to the outlook. The rollout in vaccines could see a boost in hiring after we saw higher business sentiment figures for Germany and the Eurozone.
The core inflation rate for the Eurozone will also be released today with expectations for a 1.1% gain. Germany released its own inflation numbers yesterday which posted a rise to a two-year high. Higher fuel prices will impact the Euro number but for now the focus is still on the present.
Inflation forecasts could affect the central bank rate outlook, but they have already shown a willingness to hold rates near zero regardless. Higher inflation would likely see higher central bank spending priced into the exchange rate.
The post EURGBP Near Yearly Lows After Growth Data appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/03/eurgbp-near-yearly-lows-after-growth-data/
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