The GBPEUR is still treading water beneath the 1.17 level after the latest Bank of England monetary policy update. The bank held interest rates as expected at 0.1% but the bank were split on the recovery outlook.
GBP v EUR is trading at 1.1687 and the euro was boosted after the EMA suggested the AstraZeneca vaccine was safe to use.
Bank of England Split Over Economic Outlook
The Bank of England saw the economic recovery gathering pace due to the vaccination rollout in the UK, but the pound suffered after officials were split over the trajectory of the longer-term outlook, which soured the mood over a tapering of stimulus.
The official statement said:
“The news on near-term economic activity had been positive, although the extent to which that news changed the medium-term outlook was less clear. Different MPC members placed different weights on the balance of risks around the outlook.”
One positive for the pound was a lack of new stimulus after the ECB had committed to further bond purchases. This kept a lid on any euro buying, despite the bloc’s medicine regulator giving a greenlight for the AstraZeneca vaccine.
Public sector borrowing in the UK was lower than expected by $2bn in February with the figure coming in at $19bn. Markets had expected a huge $21bn for the month after $3bn in December.
EMA Gives Restart Approval to EU Vaccines
The AstraZeneca was deemed to not be associated with a risk of blood clotting, the European Medicines Agency (EMA) said on Thursday. The markets had been awaiting the report from the regulator to see if it would slam the brakes on Europe’s already struggling vaccination campaign. The euro was at risk of selling off if it was blocked, so the agency’s decision keeps the pound v euro outlook contained for now.
Italy, France, Germany and Spain plan to restart AstraZeneca vaccinations and the news also spares the blushes of the UK government after 17 million have already received the jab in the country.
There is no further data to drive the GBPEUR this week and traders will move back towards the bigger picture of the reopening. The British and European economies are really in the same boat when it comes to tapering as all central banks are currently co-ordinating their responses and there is no plan to unwind stimulus in the near future.
Central banks will be happy to pause until the economies reopen and then gauge the result on inflation numbers and other readings, but they are going to be careful not to pull the rug from the economy. Stronger GDP figures and other economic readings help to mask the underlying damage that the government-imposed lockdowns have done.
The GBPEUR still has support at 1.15 and resistance at 1.20 for the next targets. Speak to us using the form below to discuss these factors in further detail.