The GBPEUR rate was quiet in early Friday trading despite the UK beating its estimates for preliminary GDP for the fourth quarter.
GBPEUR is trading at 1.1380 as traders are still undecided about the 1.1500 and 1.1300 levels.
UK Growth Doubles Analyst Estimates
The British economy grew 1% in the final quarter of 2020 according to preliminary data. Analysts had expected a gain of 0.5% so the number will be a boost for sterling as the country hopes for an end to lockdowns in March.
The monthly figure for December was also better than analysts had predicted, with a gain of 1.2%, over the 1% projections. The country was already heading for the strict lockdowns in the month and growth was hampered.
Bank of England economists predicted a healthy rebound for the economy in the second quarter of 2021 then the country releases the shackles of virus lockdowns. The bank also saw the UK returning to pre-virus economic growth in March of next year.
Despite the beat on estimates, the economy still saw “the largest annual fall in UK GDP on record,” in 2021, according to the Office for National Statistics. Chancellor Rishi Sunak will release the second budget of his tenure on March 4th and will try to re-invigorate the economy for the rest of the year.
Johnson Under Pressure to Confirm Opening
Boris Johnson was under pressure to confirm that he is still planning to open the economy, with March 8th being the target date. The move comes as Government scientists warned that restrictions may have to continue for months. Downing Street has said there was “categorically no change” to the Prime Minister’s plans and the reopening of schools should begin on March 8th.
Outdoor exercise rules are expected to be eased at this stage and the plans will also lay out a timetable for opening non-essential shops and then start the process with all businesses.
Conservative MP Steve Baker urged Boris Johnson to reject calls from scientists to push the rules out further. Mr Baker said: “Having a full public debate is essential at this time but I fear senior scientists are failing to recognise their power to spread despair and despondency. Some seem to be floating untested hypotheses in the media. Doing so is not science.”
His comments came as SAGE were spreading fear again about reopening, with John Edmunds, a member of the committee, warning that moving to open schools in March could see the so-called R-number rising again.
The comments from scientists seem to ignore the progress on vaccinations as the UK should have its vulnerable age groups largely vaccinated in March. The March 8th timetable for opening comes around the time of the budget and this will be an important couple of weeks for the path of the pound to euro exchange rate. If you have an upcoming currency exchange and would like to discuss these factors in further detail feel free to get in touch using the form below.