GBPEUR Could See Pressure After Friday Slump

GBP EUR Higher After European Central Bank Rates

The GBPEUR exchange rate slipped back below the 1.15 level on Friday to mark a fourth straight day of losses for sterling. Highs near 1.1650 were surrendered and the British pound could see further pressure this week after a second failure at these levels.

The GBP v EUR is trading at 1.1475 in early trading for a slight gain 0f 0.05%. Germany has some key economic data releases this week, while the Eurozone will see its first Q1 GDP estimate.

German and Euro data to guide the week

Pound v euro traders may have to wait until midweek for a clear direction on the pair as the German economy sees the release of consumer confidence. These figures are being analysed in the context of lockdowns and case rates, so they are not really market drivers, but any deviation will matter. That day will also see an interest rate decision from the Federal Reserve in the US and there is potential for volatility in the broader market. Canada made a surprise move towards winding down bond purchases last week and that could see markets move if the Fed signals something similar. That would pressure the ECB and the BoE as they move towards reopening their own economies.

Thursday will be a big day for the GBP to EUR exchange rate with German employment and inflation numbers. Analysts are expecting a 0.1% increase in inflation, while the jobs market is expected to show a 2k loss in manpower due to the ongoing lockdowns.

Friday is another big day for the single currency with GDP flash estimates for the first quarter coming from Germany, Italy, and the Eurozone. This will be the main driver of sterling and euro rates for the medium term as it will show if the Eurozone are on course to match growth estimates amid a sluggish move towards reopening their economies. Core inflation for Europe will also be released on that day, but is expected to remain flat.

US travellers to return to Europe

American tourists who have been fully vaccinated against the coronavirus will be allowed to visit the European Union this summer, according to The New York Times.

US travellers have been blocked from nonessential travel to the EU for a year due to the pandemic. Many European countries see millions of American tourists every year and the current drain is hurting the tourism sector and employment levels. The US has seen a strong vaccine rollout and it is becoming clear that a two-tier system is emerging with only the vaccinated being allowed to travel abroad to Western countries.

The EU vaccine programme will have enough doses to cover 70% of adults by the end of July, according to European Commission chief Ursula von der Leyen. This is an improvement on the previous September target.

The GBPEUR could move to test 1.14 this week with larger support levels at 1.1280, which was a key level in the 2020 move higher by the pound.