The GBP to EUR rate saw its highest weekly close since May after Pfizer announced delays for delivery of European vaccines. The pound had already been strong on the week as the UK government continues to push ahead with a mass vaccination campaign.
GBPEUR closed the week at 1.2790 and a move above that level could see the pair advance further to 1.1500.
Pfizer to Reduce Delivery of Vaccines
The US pharmaceutical company Pfizer said on Friday that deliveries of its coronavirus vaccine will be temporarily reduced to Europe while it upgrades its production capacity. The announcement is a blow for the EU and it improves the GBP to EUR outlook as the UK moves ahead with its own campaign.
A spokesperson for Pfizer told AP:
“This temporary reduction will affect all European countries. As a consequence, fewer doses will be available for European countries at the end of January and the beginning of February”.
As European countries see a delay to their vaccine rollout, the UK has already administered around 3 million shots, with the government on target to reach its target of 15 million by mid-February.
The UK will also be affected by the Pfizer delays but the country has a head start on its European counterparts and this should keep some pressure on the Euro in the coming weeks.
ECB Minutes Show Concern Over Euro Strength
The ECB released minutes from its December meeting on Thursday and the central bank showed concern over recent euro strength.
This will come into play in the week ahead as the UK and Europe both see the release of inflation figures. The stronger euro in the second half of 2020 had weighed on the single currency and the ECB will keep a close eye on the inflation figure. This will also work to cap any further gains, especially in light of the Brexit agreement, where both sides will want to show economic strength after the deal.
The UK saw a weak GDP figure on Friday and the November numbers showed the effects of the latest lockdown. The 2.6% drop meant that the country is running at an 8.5% drop since the pandemic began and the important services sector saw its worst drop since records began in 1997.
The UK economy has been heavily weighted to the services sector, but the closure of travel and hospitality businesses has crippled this sector.
Traders are giving countries the benefit of the doubt on these releases with the realisation that Europe saw its own lockdowns over the period. The sterling euro rate will look to build on recent strength and the inflation figures will be the important driver in the week ahead.