The GBPEUR exchange rate surged on Monday with new yearly highs seen in the pound near 1.1750. Today marks the next phase in the country’s reopening and traders are optimistic that the restrictions will ease as the government continues to celebrate new vaccine milestones.
GBPEUR is 0.50% higher and now has its sights set on the 2020 highs at the 1.20 level.
Boris Loosens the Shackles but Stays Cautious
The UK has eased lockdown restrictions with rules on outdoor meetings lightened. Traders shrugged off the Prime Minister’s cautious tone by firing sterling higher. The government has now ditched their “stay at home” slogan and it’s the first step in Boris Johnson’s “data-led” roadmap for the economy.
More than 30 million people in the country have now received a first dose of the coronavirus vaccine, with the Department of Health and Social Care announcing that almost 57% of UK adults had now received their first dose.
The GBPEUR exchange rate outlook is now pricing in a new surge in European cases in Germany and France, and the second quarter should see Britain moving ahead of the Eurozone in reopening and kick-starting the damaged economy.
German Chancellor Angela Merkel may now use federal control to reduce the rise in the country, after her plans for an Easter reopening were rejected by state leaders in the country. Britain’s pace on vaccines may reduce the export issue with Europe, but talks were also started for Britain to send vaccines to Ireland. Sunday newspapers said the plan was to speed up Northern Ireland’s reopening, but the move would undoubtedly anger the EU.
UK Still Lags Germany on Retail Sales
Despite a faster pace to reopening, the UK still trails Germany on retail sales. A ‘UK and Germany Spend Insight’ Report from Fable Data showed UK spending down 1% year-on-year on a rolling monthly basis, while it was 6% lower compared to 2019.
Germany saw a 12% increase from consumers for the same period as restrictions were eased, while the loss was 5% compared to its performance in 2019. Easter will be another tough time for stores as the UK will still be closed, while Europe’s largest economies are moving towards a holiday shutdown. E-commerce has boomed but the lack of footfall has seen large brands shuttering their doors for good.
Traders will now look to the German inflation figures tomorrow with analysts expecting a number of 1.7% rise in prices for the economy. Eyes will also be on the stricken tanker in the Suez Canal, which could affect goods prices if the situation drags on longer than expected. Tomorrow also sees Eurozone and French consumer sentiment numbers, but those numbers will be clouded by the current environment of lockdowns and traders will likely ignore them.
The GBPEUR still sees the British pound in pole position and the pair will seek out the 2020 highs if the UK’s reopening continues on schedule. Speak to us using the form below to discuss the impact of less intense lockdowns on the UK economy, and the GBPEUR rate.