EUR GBP Dips with Economic Data on Deck

The EUR GBP exchange rate was slightly lower by 0.05% as the pound sterling tried to recover from recent weakness. The UK economy will see the release of the latest 3-month GDP data but any positives in the number has been dealt a blow by the plan B move. Scientists, ministers and business groups have slammed some of the restrictions.

The EUR v GBP trades at 0.8580 ahead of the latest economic data.

Plan b restrictions panned by critics as unworkable

Politicians, scientists and business groups criticised Boris Johnson’s Plan B Covid measures last night, branding them ‘irrational’ and ‘contradictory’.

Talking of the advice to work from home but still attend Christmas parties, John Redwood said:

“It doesn’t make any sense It was quite clearly contradictory.”

His Tory colleague Andrew Bridgen added: “For a government that claims to follow the science, I think they’ve lost their marbles. The restrictions are incoherent and irrational.”

Professor Hunter said: “I am quite pessimistic that we could control the spread of omicron at present.

But I am hopeful that because we have both high vaccine coverage and high prior infection and because we are rolling out the booster dose better than virtually anywhere else we can at least manage the impact.”

Professor Christina Pagel of University College London, said: “…vaccine passports seem entirely pointless when we have already seen superspreader events in fully vaxxed groups.”

The move to plan B is possibly preparation for further restrictions and what the government will achieve is a 2% hit to GDP, according to the IEA on the plan B measures alone. Next week sees the anticipated Bank of England interest rate meeting but a hike is becoming unlikely.

BoE expected to hike in Q1 2022, says Reuters poll

The Bank of England will now wait until early next year before raising interest rates, as it awaits further information on the economic impact of the new coronavirus variant, a Reuters poll said.

In a November poll, economists expected a rise from 0.10% to 0.25% on Dec. 16. But we have since heard from policymaker Michael Saunders, who voted for an interest rate hike last month, saying he wanted more information about the variant before deciding how to vote.

“While the Dec. 16 meeting has looked like an incredibly close call at times, we think the MPC will vote unanimously to keep rates on hold, amid the considerable uncertainty around the COVID-19 situation,” said Elizabeth Martins at HSBC.

“One of the reasons we have been saying since the summer for why February is the earliest likely time for a hike is because of the risk of a winter wave of COVID-19 weighing heavily on economic activity.” “This is on top of all the social costs and harms to people’s wellbeing and liberties, as well as the risk of further disruption to children’s education.”

The pound sterling was seeing a strong rally but that has been unwound in the last few weeks as traders see the BoE holding back.

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Source: https://www.eurorateforecast.com/2021/12/eur-gbp-dips-with-economic-data-on-deck/