EURGBP Touching Yearly Lows After Euro Rally Fails

The EURGBP exchange rate is touching the 2021 lows near the 0.8540 level after a reverse of euro gains on Tuesday.

EURGBP is lower by -0.22% on as markets await the latest core inflation numbers from the Eurozone.

UK Defends AstraZeneca Shot

UK health secretary Matt Hancock looked to reassure the public that the AstraZeneca coronavirus vaccine is safe after a collection of European nations halted its use.

Hancock told reporters: “The Oxford/AstraZeneca jab is safe, we know that over 10 million people have had it in this country, and that’s what the British regulator says but also the World Health Organisation and even the European regulator.”

The UK cruise operator P&O is another travel company to restart domestic holidays this summer, but only for British citizens who are fully vaccinated. The company joins others that are looking to invite those with two jabs onto their holidays. As the UK reopens it will be interesting to see how many opt for foreign travel. Household savings in the UK have ballooned during the virus lockdown and could fire up the economy if the public spent it at home. With many locked down at home for much of the year, that may not be assured.

Eurozone Core Inflation Awaits

Today’s calendar will see the latest core inflation reading from the Eurozone with traders looking for a drop to 1.1% from 1.4% last month. Inflation numbers from France and Italy were mixed yesterday with the French figure coming in higher, while Italy’s stayed the same.

If the core number is higher today, then it could put pressure on the EUR to GBP exchange rate. The ECB have said they will up the pace of their stimulus program to keep yields lower, but traders will look further ahead to the reopening of the economy. EU inflation has bounced sharply from the deflationary slump of 2020 and the central bank are looking to cap any potential rise in bond yields.

The European medical regulator will update on the AstraZeneca vaccine today after the recent halt from multiple EU countries. The EMA were conducting a review and will announce the results that could drive the euro currency lower if it blocks the use of the vaccine. Europe’s vaccination rollout has struggled to get going in comparison to the UK and US.

The 2020 lows in the EURGBP rate were around the 0.8300 level and events could push the pair back in that direction if the EU and UK reopening paths diverge any further.

European car registrations dropped 20% year-on-year in the latest figures to point to a sharp slowdown in economic activity. Britain also saw export woes last week as virus restrictions aligned with the introduction of new Brexit trading arrangements.

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