GBPEUR Surges Back from a Weekly Slump

A Rollarcoaster Week for GBP EUR - Weekly Review June 18th 

The GBPEUR exchange rate saw prices surge in the afternoon on Thursday to snap a four-day losing streak. The move has seen the pound trading at 1.1683 after lows of 1.1568 on the week. One of the reasons for the euro’s drop was the news that the country could see 10 LNG cargo deliveries delayed by the tanker that is currently stricken in the Suez canal.

GBPEUR is 0.11% higher on Friday morning and German business climate numbers will come ahead of US inflation on Friday, where bond markets will be on alert.

Suez Tanker Could see European LNG Delay

A container ship is currently blocking the Suez Canal, which is one the world’s busiest trading routes, which may delay 10 vessels delivering liquefied natural gas (LNG), or around 1 million tonnes of LNG if the blockage lasts for two weeks as predicted.

The canal is the main trading path for LNG cargoes from the Middle East and work is ongoing to free the huge tanker which has found itself lodged in the canal, blocking a line of vessels from moving through. Even if the ship can be freed in the next week or so, there will still be a backlog and traders are assessing how this will hurt currency markets.

Congestion in the trading route could see shortages of fuel and a bump higher in inflation if it take longer.

German IFO and US Inflation Ahead

This morning will see German IFO business climate numbers. The survey gauges the mood of entrepreneurs for the six months ahead. The readings have been positive recently and the ongoing lockdown in Europe’s largest economy is not predicted to dent the confidence of businesses despite a slower rollout in vaccines.

Markets will be focused on US inflation numbers in the afternoon after the recent rise in bond yields. If the inflation numbers are seen moving higher, it could rock the bond markets again with a rise in borrowing costs.

US stocks were able to shake off losses in the week with a move higher on Thursday, while UK and European stocks have been higher for much of the week.

The recent export arguments between the UK and EU are still festering after EU Commission Chief Ursul Von Der Leyen said AstraZeneca had to “…honour the contract it has with the European member states, before it can engage again in exporting vaccines”.

The UK has given out 30 million vaccines to half of its population, while the EU is lagging behind at around 12% of its people vaccinated. This has led to the EU taking extreme measures to block shipments to the UK.

The GBPEUR rate is heading for the recent highs above 1.17 as the pair seeks to capitalize on the country’s path to reopening. Get in touch using the form below to discuss these factors in further detail ahead of your currency exchange.