The GBPEUR exchange rate was flat on Thursday as traders remain cautious about the next path for the exchange rate. The pound was looking like it was breaking out to new levels yesterday, but the 1.1300 level is proving stubborn again.
The IMF has been equally pessimistic about the British and European economies. The GBPEUR is trading at 1.1295 as the pair looks for further clarity on the direction.
Europe Threatens Vaccine Wars as Delays Hit
Europe continues to see struggles with its vaccination efforts, while virus cases continue to grow. Infections in some countries, such as Italy and Germany have managed to bring cases down, but France, Spain and Portugal have seen daily levels increase.
Germany is now forcing most companies to allow employees to work from home, while shops and schools remain closed until mid-February.
The EU Threatens to Tighten Rules on the Shipment of Belgian-Made Shots to Britain
This week saw the veil of unity removed again as The European Union threatened to tighten rules on the shipment of Belgian-made vaccines to Britain. The move comes after Anglo-Swedish firm AstraZeneca announced delays of their vaccine to the EU. This was set to be discussed by executives of the firm and members of the EU Commission.
The UK is moving ahead of the EU with vaccination efforts and this will play into the pound to euro exchange rate outlook. Case numbers are now falling in the UK by more than 25% in the past week. Almost 7 million have now received a first shot of the vaccine and Health Secretary Matt Hancock has said that 78% of over 80s had received a shot. The survival rate is very high below the age of 70 and the UK could be on course to reopen the economy once this age group is covered.
German Inflation Rates Ahead
German inflation numbers are set to be released today and the market is expected a bounce to 0.7%. The number is important after two months of deflationary numbers at -0.3%.
The European Central Bank has been unhappy with the euro’s strength seen since last summer and have expressed a willingness to take action. This was underlined this week as the bank talked of the potential for currency wars.
The currency issue could start to become an issue in the year ahead as banks run out of room to stimulate their economies. The central banks have been in a race to the bottom in interest rates with most developed economies close to implementing negative interest rates.
The GBP to EUR exchange rate is still being held down at the 1.1300 level and a break above could see the 1.1500 level tested. The German inflation numbers released today may decide the next action, feel free to get in touch using the form below to discuss these in further detail.