The GBPEUR rate has started the week up 0.11% as the pair looks to capitalize on last week’s data releases. Stronger European inflation supported the euro, but it was the Bank of England interest rate announcement that saw sterling soaring above the 1.1400 level.
GBP to EUR is trading at 1.1410 after a small correction and the pound will now look to gain further ground towards the 1.1500 level.
UK Government Denies Decline in Exports
The UK government has had to deny a report on Sunday by road hauliers that exports to the European Union had dropped by two thirds in the first month of the Brexit deal.
The government statement said, “We do not recognise this figure,” noting that “disruption at the border has so far been minimal and freight movements are now close to normal levels, despite the COVID-19 pandemic.”
The government also clarified that The Port of Dover data showed that volumes are “close to normal”. The denial is the first sign of tension between government and hauliers following Brexit.
The Road Haulage Association (RHA) claimed that export volume from Britain to the EU fell 68% in January compared to the previous. It seems a bit odd that one party claims a 68% drop, while the other says it is business as usual.
Light Calendar Favours the Pound Sterling
The economic calendar for the week ahead is light after the recent inflation and central bank announcements from the EU and the UK. We also saw European GDP updates and the UK version of this on Friday will be the only real mover, but the figures will show December growth figures for a period when the country went back into lockdowns so there won’t be much in the way of upside surprise.
The central bank was also bullish about the UK’s second quarter expectations and the meeting also removed the talk of negative interest rates into the summer at least. The pound sterling has now seen the Brexit risk premium removed, while the BoE has given the green light for a strong rebound.
The lack of data could see the GBPEUR exchange rate continue on the current trend upwards. There is resistance ahead at the 1.1500 level and the BoE decision to hold off on further stimulus could propel the pair higher.
On the virus front, the UK says it has administered 11.5 million shots in the country and the government is on course to reach its target of offering all over 50s a shot by May. The UK approach was more aggressive than the EU and this could lead to the UK moving more quickly to a reopening of its economy.
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