The GBPEUR exchange rate started the with a gain of 0.32% ahead of European Gross Domestic Product (GDP) numbers on Tuesday. Readings for the Eurozone and Italy will look to add to the small improvements seen in the French, German, and Spanish economies last week.
The GBPEUR is trading at 1.1320 as the pair seeks to make a breakout from the recent price range.
European GDP Will Guide Ahead of BoE Rates
Tomorrow sees the latest update on Italian GDP with markets expecting the country to post a loss of -6.7% for 2020. After the recent political turmoil, with the resignation of Prime Minister Conte, the country needs some positive news. The number will be followed closely by GDP numbers for the Eurozone and analysts expect a reading of -5.4% for the bloc.
The GDP numbers are not expected to differ too far from expectations, but last week saw improvements in the Spanish and French growth rates, while Germany saw a boost from higher inflation numbers. Inflation numbers will also be released on Wednesday for the EU countries and this is expected to jump from 0.2% to 0.9%. A higher number would remove the risk of deflation for the euro and this would please the ECB.
Thursday will see the Bank of England meet to announce its latest interest rate and monetary policy decisions. While the bank is expected to stay on hold this time around they could shed some light on the future path of interest rates as it releases the latest quarterly forecast.
Economists surveyed last week expect interest rates to remain at or above the current level of 0.1% into 2023. Cheap borrowing is a boost for government and current Chancellor Rishi Sunak. The country has spent £300 billion supporting the economy and has pushed government debt to a record.
Vaccine Woes “the Best Advert for Brexit”
Germany’s Die Zeit said the European commission had provided “the best advertisement for Brexit” with its actions over the coronavirus vaccine delays. They added, “it is acting slowly, bureaucratically and in a protectionist manner. And if something goes wrong, it’s everyone else’s fault.”
Last week saw AstraZeneca add to the Pfizer vaccine delays and this saw a reaction from the commission, which threatened export controls on vaccines to Northern Ireland. This led to an outcry across Europe and they have since backed down, but criticism has come from much of Europe’s press.
The UK had administered around 7 million vaccines last week, while the European program has barely gotten off the ground. The latest delays threatened to widen this gap and the pound has seen support.
The GBP to EUR rate could target 1.1500 if sterling can build on recent strength, but there is a wall of economic data to get through. Get in touch to speak to us about this upcoming data, and stay up to date with the latest data releases so you can make informed decisions about when to trade.