GBPEUR Could See Losses with 1.1700 Resistance

The GBPEUR exchange rate is flat for the week as the market awaits the latest inflation number from the German economy. The market is expecting a dip of 0.2% from last month but prices have been rising in other economies due to fuel prices and supply shortages. The German economy has opened up again but recent PMI figures from the UK and Europe suggest a slight slowing in activity after the initial bounce.

The GBPEUR is trading at 1.1635 and will also see the final reading for UK Q1 GDP today.

Markets look through yearly inflation

The latest German inflation number is expected to dip to 2.3% from 2.5% in the previous month.

As with the latest US PCE number last week, traders are likely to ignore the sharp yearly increases and trust the central bank ‘transitory statements. The US was seeing a price increase that was the largest since 1992, while the number without food and energy was the highest since 2008.

Further data today will be the final reading of Q1 GDP for the UK economy but that is unlikely to differ from the two-to-three previous estimates. The pound’s surge in recent weeks from the UK growth projections has also been neutered as the Indian variant takes hold in the country.

Tomorrow will also see the release of Eurozone inflation numbers and the ECB will watch closely but will likely attempt to brush off any gains like the BoE did last week.

UK health secretary sees July 19^th as the full reopening

The pound got a boost on Monday after new the Health Secretary Sajid Javid confirmed that the lockdown will end on July 19^th as planned. The move would be the delayed final part of Boris Johnson’s roadmap and will see a variety of changes. Wedding and funeral restrictions will be lifted, alongside measures on social gatherings.

The planned easing will also see ongoing restrictions lifted for hospitality venues. The statement by the health minister maybe can’t be fully trusted after recent backtracking with cases rising above 18k, there is no explanation on what happens in two weeks if cases are still growing.

Mr Javid told MPs that the July 19^th reopening will be “the start of an exciting new journey for our country.”

“No date we choose comes with zero risk for Covid,” he said. “We cannot simply eliminate it, we have to learn to live with it,” he said, and that statement will boost the hopes of pound bulls that the current end date is irreversible. The country will have a tense two weeks ahead as the cases of the Indian variant rise.

The GBP v EUR exchange rate was rejected at the 1.1700 level last week and that could see further losses in the week ahead for the pound. That could be driven by the European inflation data in the coming days.

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