The pound to euro exchange rate closed the week at 1.1099 after an early week dip. The pound fell due to the latest lockdown in the UK on Monday, but this was balanced by Germany extending its own lockdown.
The pound has still been unable to see any meaningful gains from the Brexit trade deal that came into force ahead of January 1st. The lockdowns are weighing on sterling but after all the threats of Brexit chaos, the agreement has come into play without any issues.
GBPEUR could see volatility later in the week as the UK releases its latest GDP figures.
UK Opens New Test Centres Amid Record Numbers
The UK government is set to open seven “super vaccination” sites in England as the country looks to roll out its vaccines on a larger scale. Vaccines Minister Nadhim Zahawi said there will be a “massive uplift” in the number of immunisations given out this week. The government is yet to explain how they will tackle crowds arriving at these sites. The sites are said to be appointments-only but this could lead to chaos as many turn up unannounced.
The news comes after the UK regulator approved a third vaccine in the Moderna jab. The country announced another record in the number of deaths registered “within 28 days of a positive test”. The ability to immunise the vulnerable groups in a quick manner would make the difference in the gbp to eur rate and world currencies will see some swings based on the speed of each country’s ability to administer vaccines and get their economies back open.
Germany took the wind out of the euro’s sails with news that they were extending their own lockdown, while France extended the border restrictions with Britain until “further notice,” so the Eurozone countries are also struggling with their own virus issues.
Inflation Figures Hit Euro Gains
The euro was also hit by data which showed a continued deflationary tone in Germany and the Eurozone. This was an issue for the European Central Bank last year with officials even threatening action to intervene in the currency.
Despite huge stimulus packages, the euro economy is still not seeing any growth and this could really affect the pound to euro rate later in the year if the UK can get its economy back open. The pound is trading far from the levels of the Brexit referendum and both have pursued the same strategies of low interest rates and stimulus measures, so there is surely some value in the pound despite the current woes.
The Bank of England governor talked of an £80 billion hit to the UK economy from the latest Brexit arrangement but this is small in relation to the country’s GDP and means little in the face of an economy on full lockdown.
Resistance for the pound is at Monday’s highs near the 1.1200 level if it wants to see further gains for the rest of the month. Get in touch using the form below to discuss your upcoming currency exchange, and the tools available to plan ahead during times of uncertainty.