The GBP to EUR exchange rate was lower in the morning trading session, but buyers emerged nearer the halfway stage as markets await Prime Minister Boris Johnson’s comments on the lockdown status.
GBPEUR trades at 1.1570 and tomorrow also sees unemployment data from the UK.
German businesses still upbeat on outlook
The German IFO Business Climate numbers were strong again with a reading of 92.4. Analysts were expecting a print of 90.5 versus 90.3 las month, but last week saw strong PMI numbers hinting at a positive mood for entrepreneurs. The index has bounced from lows at 74.2 in April at the height of the market panic.
Tomorrow will see the UK release its latest employment numbers with markets expecting a loss of -30k jobs after -88k last month. There is still a risk to the country’ retail sector and this was highlighted by news over the weekend that John Lewis may downsize its stores again with up to eight of its larger premises at risk. The company has been hit by less store hours, but also by the rise of e-commerce as governments tell consumers to “stay home”.
Chancellor Rishi Sunak will likely extend the country’s furlough scheme and he will hold onto this announcement until the budget for the added optics.
The GBP to EUR has been higher since the turn of the year as the Brexit risk premium was taken away but there are still rumblings in the fishing sector.
Ministers are looking at proposals dubbed “water wars,” which would restrict imports of European mineral water and some food products. The measures come in retaliation to recent blockages on UK shellfish. The three year Brexit talks saw harmony for about three weeks after initial trouble at ports and there are already squabbles appearing.
Johnson to take centre stage on reopening
The country will now turn its attention to Monday’s “roadmap” from Prime Minister Boris Johnson and this should have the largest bearing on the pound to euro outlook. Johnson has talked of this lockdown being the last one, but he has been talking of a cautious reopening which may disappoint.
Matt Hancock also suggested a cautious approach that gave an “indicative” outlook for reopening, when appearing on Sunday tv.
The British pound has soared this year as investors the weight the potential for a quicker end to lockdowns in the UK. If the Prime Minister stalls that opening, it could see some of the gains unwound as other nations catch up with their vaccination programs.
GBPEUR has resistance at the 1.2000 level but it would require a bullish Prime Minister and strong jobs numbers- both of which are beginning to look unlikely.