The GBPEUR exchange rate is 0.30% higher after a strong morning with the British Pound boosted by the latest GDP update. The German and European sentiment index readings were also lower as we had predicted this morning.
GBPEUR trades at 1.1565 with sterling looking to erase some of last week’s losses.
Further data Gaps for Britain and Europe
The day saw another example of the data gap between the UK and Europe as Britain’s GDP figures were better-than-expected, while European business sentiment disappointed.
GDP returned to growth with a 0.4% print for February, with the economy still 7.8% below the pre-virus levels. This was better than the -8.6% expected and the January export slump was one area that fared better in the latest data.
Paul Jackson at Invesco Research told the Guardian:
“We expect further recovery in the March and April period (note that the British Retail Consortium has just reported that same-store sales were up 20.3% in March versus a year ago, much better than the expected 12.0% gain).”
The UK is also seeing a sharp rise in footfall at stores and theme parks as the country sees restrictions loosened from the virus. The figures bode well for the UK and could see it receiving further upgrades after the IMF predicted 5.3% growth for this year.
The country is unlikely to see a return to unrestricted travel very soon and that should see UK households taking vacations at home. The result of that will benefit the UK economy as the country has built up record savings in the last year due to lockdowns.
European Sentiment Struggles in Lockdown
German and European ZEW economic sentiment slumped for April with the ongoing lockdowns weighing on expectations for the economy. France’s latest struggles with a third wave of the virus are also aligning with the German government discussing further lockdowns and the sentiment figures are seeing recent positivity waning.
The next big data set for the GBP to EUR will be German inflation on Thursday, with the Eurozone number on Friday. Both of those are likely to be depressed by the lockdowns and the pound will have a chance to build on the latest reopening and GDP boost.
Europe is seeing a vaccine boost with Johnson & Johnson shipping single dose vaccines to the continent. The US company has signed up to deliveries of 55 million doses by June and another 120 million in the third quarter. This will give investors hope that the EU can get its rates higher to mount its own reopening recovery with the current timeframe being six weeks behind the UK.
The British economy could see a sharp bounce in the second quarter while the European countries are in lockdown and the 4% growth expectations for Europe this year, as predicted by the IMF, are maybe a bit hopeful. The tourist destinations in the country are also unlikely to see any big increase in travellers over fears of virus imports.
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