EURGBP Rallies Back from Three-Month Lows
The EURGBP exchange rate was trading 0.14% higher after the Wednesday session with employment data ahead for the UK today. The pound initially rallied on the release of inflation figures showing a rise of 2.5% in consumer prices. Traders are pulling back on rate hike expectations but there are also fears of a new surge in virus cases.
The EUR to GBP rate breached the June lows and saw lows near the 0.8500 level on the day, but bounced back to 0.8536.
UK virus situation gets more confusing
Further confusion was seen over the UK’s planned reopening on the 19th July as cases rose above 42,000 and scientists urged the government to halt the planned lifting of restrictions.
That was happening as the UK gets set to add more countries to its travel ‘green list’ today. It was said this week that tourist favourites Ibiza, Mallorca and Majorca could be moved back to the amber list only two weeks after going green.
A collection of 1,200 medical professionals also wrote to the Lancet medical journal to urge the government to back off from the planned lifting of restrictions.
We believe this is a terrible mistake. This strategy is already putting intense pressure on struggling healthcare services and will lead to many avoidable deaths and long-term illness.”
The comments will add further pressure to the government with the rule changes being only days away and this is taking some steam out of the pound.
From Monday, all legal coronavirus rules will be scrapped, including mask wearing and the ‘rule of six’ for meeting indoors. The euro is also being weighed by cases with Italy also seeing another move higher in cases yesterday, while France and Greece have tightened restrictions.
Inflation surges in the UK, employment ahead
The UK economy saw the highest inflationary print in three years with the economy posting a 2.5% gain in prices. That was higher than the analyst expectations for 2.2% and is another stretch from the Bank of England’s 2% target.
The move marked the highest rate since August 2018, with prices increasing due to the economic reopening and higher energy costs. A spokesman for the ONS said that the price rises were “widespread,” with increases in food and used car prices.
The Bank of England said that inflation could rise to 3% but it may arrive sooner, and the bank’s outgoing Chief Economist said that it could be closer to 4%. That would put pressure on the BoE to raise interest rates and the US Federal Reserve will feel the same heat after price in the United States surged to 5.4% for June.
Today also sees the release of the latest UK employment data with the country expected to post an additional 90k jobs, down from 113k in the previous release.
The EURGBP exchange rate trades at 0.8520 and has economic data this week that could test the April lows.
The post EURGBP Rallies Back from Three-Month Lows appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/07/eurgbp-rallies-back-from-three-month-lows/
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