The GBPEUR was trading near its yearly highs as traders await the latest interest rate and monetary policy news from the European Central Bank. Stock markets surged yesterday as US inflation cooled, reducing the threat of rising bond yields at the same time as the $1.9 trillion stimulus was approved.
The GBP to EUR is just below 1.17 and the ECB meeting will determine the next path forward for the pair.
US figures Mean Less Pressure on ECB to Act
Yesterday’s US inflation figures were being closely watched as investors feared the latest rise in bond yields. The numbers came in as expected and this saw stock markets surging as bond market yields were lower. The US House also approved the $1.9 trillion stimulus bill, although no Republicans voted for the bill.
The cooler inflation number meant the risk of rising government debt payments is loosened and this will take some of the pressure off the ECB decision at today.
Investors were expecting the central bank to keep interest rates at current levels, but after two weeks of lower-than-average bond purchases, a move to additional bond purchases was expected. This is now less important after the US market cooled the inflation fears, but any action will impact the GBP v EUR exchange rate.
Christine Lagarde and the rest of the governing members will probably increase the level of purchases outside the current scope, but expect comments regarding yields and a possible extension to their programs.
Johnson Hits Back at Export Claims, Holiday Date Clarity Urged
Boris Johnson has criticized the EU over comments that the UK has blocked coronavirus vaccine exports to the union. The statement by European Council president Charles Michel caused outrage in the UK government, with senior EU diplomat called to the foreign office over the row on Wednesday.
The UK and EU are involved in a number of arguments only two months after the Brexit deal, which has still not been formally ratified by the EU Parliament. Disagreements over Northern Ireland, fishing and now vaccines have soured relations between the two sides.
UK ministers are also under pressure to clarify the date for foreign holidays after MPs said the target date of May 17th should be set in stone to help businesses and consumers. Greece and Spain are two of the countries that have already said that they will welcome vaccinated tourists in the summer.
Hopes of a resurgence in travel and tourism in Europe may be hit by low uptake in vaccinations and this will likely be the next drama ahead in the summer.
The GBPEUR pairing is trading at 1.1690 and the path ahead will be determined by the ECB, get in touch to discuss your upcoming currency exchange in further detail using the form below.