The GBPEUR was saw a new 2021 high on Wednesday as the pair touched the 1.1706 level. The pair surrendered some of those gains but is on the front foot again this morning ahead of the latest rate and policy update from the Bank of England.
GBPEUR is trading at 1.1676 as it awaits some European data and the BoE rate decision.
Bank of England to Follow Federal Reserve
The Bank of England will update markets today on its latest interest rate and monetary policy. The BoE are likely to follow their counterparts in Europe and the US with a commitment to low rates into 2023. Yesterday saw Fed Chair Jerome Powell delivering the US policy and he made it clear that support would be given until they saw “substantial” progress on the economy.
The comments helped to cool a recent fear of inflation, but central banks are being careful not to encourage asset bubbles.
The BoE is expected to keep interest rates on hold and is likely to keep its asset purchase scheme at £895 billion. The US has seen a stronger economic recovery than the UK and also just saw another $1.9 trillion in Democrat funding via a stimulus bill.
With the country set to reopen further in the next weeks, the bank are looking for a rebound in the UK economy in the latter part of the second quarter.
European Data to Watch First
ECB President Christine Lagarde will also make a speech today but it is only a week since the bank’s own monetary update and there is unlikely to be anything new.
Trade balance figures will be released this morning and it will be interesting to see if the Eurozone saw a similar struggle in imports and exports as the UK. The late signing of the Brexit agreement saw a bit of turmoil at the borders, while France had also shut its borders over the virus.
Europe’s drug regulator is under pressure to clarify its stance on the AstraZeneca vaccine today after the recent halt in European countries. The drug maker has said that 17 million people in Europe and the UK have received the vaccine.
The EU saw its already sluggish vaccine rollout hurt once more and will eagerly await today’s report. That will likely affect the pound to euro outlook more than the BoE. Italy’s vaccine program relies heavily on the shot produced by AstraZeneca and the country’s program is currently on hold.
Currency traders are obviously expecting the EMA to give its seal of approval to the vaccine, but if the report suggests it is unsafe then it will likely see another wave of selling in the euro. A halt to the vaccine would see the UK opening further in Q2, while Europe would stay on lockdowns.
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