EURGBP Looks for ECB Comments to Drive Price

The EURGBP exchange rate is flat in early trading on Thursday and the ECB interest rate announcement later could create a spark for the pair. The bank is unlikely to change their current zero percent rate but may give some insight to the future path of rates or stimulus in the press conference.

The EUR to GBP rate is trading at 0.8635 with sterling recovering from the recent 0.8700 level and this is the obstacle for any further gains in the euro.

Stimulus expected to be the ECB focus

ECB President Christine Lagarde is expected to commit to the central bank’s cheap money policies on Thursday as Europe’s largest economies struggle with a virus surge.

After calming markets during the spike in bond yields with further emergency bond purchases, analysts are expecting a quiet meeting this time around with no move on interest rates or stimulus.

Instead, Ms. Lagarde will likely reassure markets that the bank will stay committed to stimulus over the time of recovery. These were statements echoed recently when she said the economic recovery was still supported by “two crutches” and that removing one too early would be a mistake.

The ECB are still within the bounds of their 1.85 trillion euro stimulus program and no further talk is needed on bond increases with inflation cooling off lately due to ongoing lockdowns.

Europe’s biggest economy, Germany, has seen its politicians voting on Chancellor Merkel’s ‘emergency brake’ lockdown measures, which would apply federal ruling instead of state-owned decisions. This raises the risk that the country could join France in a further lockdown as cases rise and that would derail the European recovery path.

UK launching vaccine passports

The UK government are said to be launching coronavirus vaccine passports next month, which will coincide with the travel reopening stage.

Government officials and travel industry officials are said to have agreed on plans in a phone call yesterday. Prime Minister Boris Johnson wants the covid certificates ready for May 17 and his official spokesperson said:

“They are seeing first-hand the work on certification that Israel has up and running over there as we continue the work that we are doing on certification as an option here.”

The move will see travel operators allowed to get back on track will not please many in the country who are seeing the promise of summer holidays and free travel evaporate.

The euro versus the pound will be affected by the travel arrangements as it will determine where the UK consumer spends their lockdown savings. European resorts will be desperate for the return of holidaymakers, but it doesn’t look like they will get close to previous numbers anytime soon.

European travel destinations Spain, Portugal, and Greece are said to be pushing the EU to remove bans on countries that have higher vaccination rates.

The euro v sterling rate has bounced from the 0.8600 level this week and there is potential for another push in the euro to test the 0.8700 figure if the ECB are dovish on tapering expectations.

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