The EURGBP rate saw its worst day in 2021 with the pair sinking below the 0.8600 level. The pair has unwound the election fear bets after the Tories scored big wins in England, while the Scottish referendum fears are being pushed into the distance.
Traders are focusing again on the Bank of England meeting, where a tapering of bond buying was met with a strong growth upgrade to 7.2%. Today will see ZEW economic sentiment from the Eurozone and Germany.
The EUR to GBP rate is trading at 0.8604 on Tuesday and the pound will look to make further gains towards the 0.8500 level.
Netherlands pushes back against vaccine passports
The EU is splintering again after the Netherlands government pushed back on vaccine passports. Spanish Prime Minister Pedro Sanchez and his Greek counterpart Kyriakos Mitsotakis have both been pushing for the certificates to be released by June 21st as the two tourism-reliant countries seek a reopening. But the Dutch Prime Minister Mark Rutte said there should be more discussion on the process. The EU actually had a roadmap for the passports written in 2018 and the virus has been an opportunity to implement them.
Portugal is the only EU country on the list of the UK’s green travel zones and the country would see a boost to its beaten-down tourism sector ahead of other nations.
Trials for the EU passport will begin in the coming weeks with the countries hoping for a scheme to be up and running by the end of June. The app is aimed at restarting free movement within the continent so it will not automatically mean access to European beaches.
The pound sterling has gained ground as the EU stutters towards a reopening and the travel hassles will mean that more of British consumers’ money will stay in the country to avoid PCR tests and social distancing abroad.
EU data will lead this morning
Italian industrial production figures came in lower than expected this morning at -0.1% against expectations of an 0.4% gain. The year-on-year figure was higher at 37.7% versus 37.2%. as the country struggles with the restrictions and case numbers of recent months
The headline numbers today will be the ZEW economic sentiment numbers from the Eurozone and German economies. These numbers have been subdued by the ongoing strict lockdowns but the German economy has been moving closer to a reopening in recent weeks.
A speech from the Bank of England governor Andrew Bailey is also planned this afternoon, but after last week’s monetary policy announcement, Mr Bailey is not likely to give away any further details on the path ahead for the bank’s policy.
The BoE slashed its bond buying programme by £1bn per week as the economy continues to improve, although the bank stressed that the policy outlook remains accommodative, and that inflation is only a “transitory” theme.
The EURGBP has support at 0.8600, while the lows for 2021 were set around the 0.8500 level.
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