The GBPEUR will be busy at the start of the week with employment data released on Tuesday and inflation on Wednesday. The failure to hold the 1.17 level brings risk of a correction, while the UK and EU are caught up in yet another argument.
GBPEUR is trading at 1.1650 and the pair has support at 1.1500 if a larger pullback were to emerge on the economic data.
Brexit Gloves Are off for UK and EU Vaccine Spat
It’s another week and another argument for the UK and EU, with the bloc threatening to ban vaccine exports out of the UK.
EU Commission president Ursula von der Leyen said over the weekend, EU could “forbid” exports, “That is the message to AstraZeneca.,” she added. The EU are starting to fret about their bungled vaccination program and the UK are now at the centre of yet another post-Brexit argument with the ink barely dry on the deal.
EU commissioner Maireád McGuinness told the Andrew Marr Show that no formal decision had been made but leaders will discuss the issue when they meet on Thursday.
“European citizens are growing angry and upset at the fact that the vaccine rollout has not happened as rapidly as we had anticipated,” she said.
“Both the EU and the UK have contracts with AstraZeneca and my understanding is the company is supplying the UK but not the European Union.”
Last week saw the EU formally launching legal action against the UK for extending its grace period on Northern Irish goods checks and the trading relationship between the two sides is off to a rocky start.
UK Data Will Dominate the First Half of the Week
Tomorrow will see the release of UK employment data for December, with inflation numbers coming on Wednesday. After losing -114k jobs in November, the latest reading is expected to be another bruising loss of -170k jobs. These job losses are coming despite the ongoing furlough and its extension into September.
Inflation numbers for February are expected to show a tick higher to 0.8% from 0.7% but the market will be looking for a potential move higher. Global stocks are on yield rate alert after the Federal Reserve refused to make any aggressive statement to tackle the recent rise in the US 10-yr bond. This saw the benchmark for government debt reaching highs above 1.70%.
A higher UK inflation number would put pressure on the Bank of England to bring forward its rate hike plans once the economy gets fully reopened in June. The BoE’s Chief Economist Andy Haldane spoke of an “inflationary tiger” being unleashed in a recent interview, while his colleagues at the bank have been more cautious on the economy’s rebound.
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