The GBPEUR exchange rate is threatening to breach the 1.15 level on Friday with the pair slightly lower on the week. The GDP bounce on Tuesday failed to see further buying in the pound and the euro is looking to capitalise.
The GBP to EUR trades at 1.1501 in early trade and the market may be quiet until the Eurozone inflation release later this morning.
Scotland Joins UK Reopening
Scotland will also move to reopen more non-essential businesses on April 26th with First Minister Nicola Sturgeon saying that the country has met its target of offering all above the of 50 a dose by mid-April. Scottish cases are at the lowest level since last September and rates have fallen 40% in the last two weeks.
Ms Sturgeon said “too much all at once” could be a risk but the easing will continue and that will see the UK almost fully reopen at the end of April. Unfortunately, there is now talk of a South African variant causing cases to surge. The UK is now looking at the data on the Johnson & Johnson vaccine after the US FDA put a “pause” in its rollout. The UK hadn’t approved the vaccine but ordered 30 million of the shots.
Despite this, the UK had already vaccinated the majority of its population so it would be less at risk than Europe if another vaccination was halted. The GBP to EUR is not seeing this factored in as the pound still trades well below the pre-Brexit referendum valuations and will see a speedier return to growth.
Eurozone Inflation Data May Fail to Inspire
Today sees the release of European inflation data with the market expecting a dip to 0.9% from last month’s 1.1%. Yesterday’s German number came in as expected and the Eurozone equivalent is unlikely to stretch too far from forecasts. The economy is still largely in lockdown and it will fail to see prices rising in the same way as the US.
A softer inflation number will please the European Central Bank but it won’t do much to change the pound versus euro rate outlook. The balance of trade figures released at the same time may help after January’s slump in exports. The February figures for the UK saw a normalization of trade after a big drop in January exports as companies struggled to react quickly to the last-minute Brexit deal.
Exports in February helped the UK to a 0.4% GDP improvement for the month. The value of goods shipped to the EU jumped 46% from the previous month. This reversed a drop of 42% in January. Exports are still below 2020 levels but will become more steady in the next months and will provide a clearer picture of the Brexit effect.
The GBPEUR has been unable to find buyers after last week’s slump and could fall further as it hovers just above the 1.15 level.
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