GBPEUR Still Supported by 1.15 After German Data

The GBPEUR exchange rate is still being propped up at the 1.15 level and that will be key for the next move in the pair. Sterling versus the euro will either go to 1.14 or make moves to recover last week’s selling. The market got a look at the latest inflation data from Germany and the ongoing lockdowns avoided any shocks there.

The GBP to EUR trades at 1.1505 and is up a small 0.05% on Thursday and tomorrow’s Eurozone inflation number will also likely be subdued.

German Inflation Matches Expectations

The latest release of German inflation came in as expected with a year-on-year increase of 1.7% and a monthly reading of 0.5%. The figure is restricted by the ongoing lockdowns as we saw in the US numbers this week which were very strong.

Central banks could have a headache with inflation down the line but they do not want to admit that and prefer to say that it is transitory but global economies are growing while they are in lockdown and once the Eurozone countries join the UK in reopening it could increase price pressures.

Inflation figures are also due this morning from Italy and Spain, but they will likely be suppressed like the German number. The yearly number in Germany has bounced to pre-virus levels despite the country being in lockdown. The peak in the number in the last ten years was just below 2.5% and once Germany opens up and nudges through the 2% level it will start to ring alarm bells.

The Bank of England will also release a credit conditions survey this morning, which is a quarterly look at banks and building societies’ lending trends.

Europe’s Vaccine Rollout Still Hangs in Balance

The European Union’s vaccine rollout has been closely watched this week as the UK has moved to its next stage of reopening.

The latest blow came in reports that the Johnson & Johnson vaccine was having issues with blood clots and European countries have diverged in whether they will use the jab. Poland, France and Hungary were among the countries that said they would go ahead with the rollout of the US company’s vaccine as they face continuing pressure to ramp up their numbers. J&J announced on Tuesday they would delay deliveries to Europe after the FDA recommended a pause. The European Medicines Agency did not advise putting the vaccine on hold and will make a decision next week on its use. This is just another obstacle for the EU as it raises questions over two of the key vaccines needed to expand their herd immunity numbers and get back open.

The GBPEUR saw some heavy selling last week as traders felt they had overdone the British economy expectations but Europe is not looking like it will catch up to the UK’s reopening anytime soon and once the pound has found a floor then the pair could start marching higher once more.

Get in touch ahead of your currency exchange to discuss these factors, and how your exchange rate could be impacted, in further detail.

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