The pound to euro exchange rate was back near the recent highs on Friday after big swing on Thursday to erase weekly losses. The pair will face UK GDP figures and German unemployment numbers in the week ahead. The market will be watching for a potential no confidence vote on Chancellor Merkel after an Easter climb down over virus restrictions.
GBPEUR was nearing the 1.17 figure on Friday with recent highs coming in last week at 1.1716.
German Inflation Will Lead the Week
Next week sees German inflation numbers released next week with the previous number coming in at 1.3%. Traders will be looking to see if the release will follow the UK with a drop in the latest figures due to retailers cutting clothing prices. The German economy has seen strength in manufacturing, but the country is still in a lockdown and that should keep prices contained.
Markets will be watching to see how the political situation in the country plays out this week with calls for a no confidence vote in Chancellor Merkel after her calls for a strict Easter lockdown were rejected by health ministers and politicians. Opponents were quick to pounce on her “mistake” and we could see some uncertainty in the week ahead.
Germany will then see unemployment numbers released on the Wednesday with the country’s economy stuck at 6% unemployment. The UK saw its own unemployment rate dropping to 5% this week after the country lost less jobs than expected. The UK will then final GDP figures for the fourth quarter, although this will largely be priced into the pair.
The UK is on a path to reopening more quickly than Europe and this will also play into later GDP numbers with a potential head start in Q2. Europe’s leaders drew criticism from Britain this week as they looked to ban vaccine exports to the country over fears that they are being left behind in the reopening.
European Inflation Due, But Watch for Suez Issues
The world another bizarre twist this week as a stricken cargo ship ran aground in the Suez Canal. Tug boats and diggers worded to free the ship as up to 200 vessels carrying goods across the world, were trapped at the entrance to the canal. The ships include cargoes of LNG bound for Europe and although the market is not reacting much to the news, we cannot rule out the possibility of shortages or inflationary effects.
The MH Ever Given weighs around 220,000 tons, which is making it hard to dislodge and float the vessel. It could take weeks to clear the blockage as rescue teams are talking about removing some of the ships containers.
The pound to euro has seen a weekly rebound in the euro erased on Thursday and the pair is now pushing towards the 1.17 highs once again. Sterling will look to break out above this level with the 2020 highs being at 1.2000.
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