The GBP to EUR rate was higher by 0.10% on Thursday with the pair looking to capitalize on five-straight days of price gains. The European economy awaits the release of full year Gross Domestic Product (GDP) from Germany today, while tomorrow sees the latest UK GDP update.
GBPEUR was trading at 1.1225 and the pair is now eyeing the 1.1275 resistance level which was a high in November.
German Economy to Grow by 3.5% in 2021
Germany’s BDI industry association have predicted that Europe’s largest economy will grow by 3.5% this year after a drop of 5% in 2020. The latter figure will be confirmed today with a full year GDP outlook for the German economy.
The latest forecast from the BDI is less hopeful than the government’s own figures, which predicted a rebound of 4.4%. The group claims that Germany could return to pre-pandemic levels by the first half of 2022, but this may be in doubt as the German government moved to lock the economy down until April.
Germany’s recovery will depend on the export sector and the lobbying group saw exports jumping by 6% this year after plunging 11% in 2020. The country’s economy could also benefit from a new US President, which will reduce the threat of tariffs on the EU economy.
Today also sees the release of meeting minutes on ECB policy and this could give some insight into the bank’s path on policy. The data could have more weight after the Bank of England stepped back from negative rates and further stimulus in the near-term.
Europe Aims For Quicker Vaccine Shot Delivery
The European Union struck its eighth supply deal for vaccines and deliveries are set to accelerate from the beginning of April. The EU is falling behind the UK in vaccine administration and this has changed the pound to euro outlook in the last week. The UK has opened up some mass vaccination centres in the country and this has led to around 3 million doses already being given out.
A further 1,500 fatalities were listed in the UK, which was the biggest figure for one day since the virus began. The media keeps reminding us that those deaths “came within 28 days of a positive test” which clouds the accuracy of the daily numbers.
Boris Johnson has said that vaccinations will be offered 24 hours a day, seven days a week once the supply allows.
The UK’s vaccine approach could see the country build an advantage on the EU in the race to reopen the economies. There is also potential for the EU to move toward negative interest rates and further stimulus before the UK. These factors will drive the GBPEUR outlook over the first half of 2021.
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