The GBPEUR exchange rate was -0.17% lower on Wednesday morning after the UK saw inflation figures coming in lower than expected. The miss was attributed to shops slashing the prices of their clothing lines and other.
GBPEUR is trading at 1.1580 with the pair taking a pause from recent sterling gains.
UK Inflation Comes in at Half of Expected Rise
The UK inflation rate dropped unexpectedly in the month of February after retailers slashed the prices of clothing and footwear in an attempt to move stock. The Office for National Statistics (ONS) said consumer price inflation was 0.4% in February, with economists forecasting a rise to 0.8%.
Prices fell for clothing, used cars, and games, while the data showed fuel and housing costs rising. The ONS said retailers were slashing prices for clothing and shoes in February, rather than raising prices after the January sales as we have seen previous years.
In travel news, Spain have announced that they will lift restrictions on UK arrivals after a three-month long travel ban. The move will see air and sea arrivals re-introduced on March 30th. Travellers now find themselves in apposition where they can go to Spain, but the UK government wants to fine anyone leaving the country. The foreign travel issue will have a bearing on the GBP to EUR exchange rate because of the spending that will take place. That spending will either be seen domestically or abroad.
Europe and the UK is seeing record levels of savings as consumers remain locked down and unable to spend. Savings are also rising due to the uncertainty of the times.
More AstraZeneca Controversy Over Data
There was more drama with the AstraZeneca vaccine data after encouraging trial data from the United States pointed to the vaccine being successful, but hours later, new concerns were voiced by US health officials that the Anglo-Swedish drug maker had used “outdated information” in its largest study, which may have given “an incomplete view of the efficacy data”.
The UK and EU were caught up in a fight this week with the European Union threatening a ban on vaccine exports, which would slow the UK’s rollout of vaccines.
European investors will be looking at purchasing manager’s index (PMI) data for March this morning for the German and EU economies. Germany has shown strong manufacturing numbers despite the lockdown and this should help to support the euro. The UK will see its own PMI data released an hour after the European figures.
The UK relies more on its services sector, but that area of the economy has been the hardest hit during the ongoing lockdowns.
Get in touch to discuss these factors ahead of the next set of PMI data using the form below.