GBPEUR Exchange Rate: The Week Ahead April 18th

GBP EUR Higher as Dutch Inflation Sees 40-yr High

The GBPEUR exchange rate was lower again last week as the pair was unable to mount a recovery from the previous week’s tumble. Better-than-expected GDP numbers for the UK failed to lift sterling and the pair moved under the 1.15 level on Friday.

The GBP to EUR rate bounced back to try and hold the 1.15 level so this will be the key pivot for further gains or losses. The euro had been seeing inflows on a vaccine catch up theme, but Germany’s health minister was calling for another lockdown in the country.

UK Jobs Update Coming

UK employment numbers will be released on Tuesday and the market is expecting another sharp fall of -147k jobs. The furlough program is still in force until the end of September, so it is a worry to think what the program is masking.

There have been some hiring increases showing up in the latest services sector PMI so the potential is there for a positive surprise.
The next release for the UK economy will come on the Wednesday with inflation expected to move from 0.4% to 0.7% despite the lockdowns. The latest reopening will be too late to filter through to the March figures but it could give some insight into the pricing pressures in the UK once things are fully open.

The Bank of England’s Chief Economist had previously warned of an “inflationary tiger” being unleashed, but he will have to watch on from a new post as he leaves in June for a CEO role at the RSA. It’s unknown whether his inflation comments rattled the bank’s dovish majority as central banks were trying to remain tight-lipped and stoic on inflation amid bond yield rises.

ECB Interest Rates Will be the Focus on Thursday

The GBP to EUR was lower this week as traders priced in the potential for the EU to catch up on vaccinations. That thesis was dealt a blow with the news that the Johnson & Johnson single shot vaccine was the latest to be paused over blood clot fears. France is also still in lockdown and the German health minister Jens Spahn was calling for his own country to be locked down ago over fears of surging cases.
The European Central Bank will then have their monthly interest rate meeting on Thursday, and they will get another free pass to keep rates at 0% and not make any moves on stimulus out with their original PEPP bond buying scheme.

ECB President Christine Lagarde said this week that the euro zone economy is still standing on the “two crutches” of monetary and fiscal stimulus, which couldn’t be taken away until there is a strong recovery. Her comments on Wednesday also reiterated that the bank would allow rates to rise if that was accompanied by underlying growth.

“Think of a patient which is out of a deep crisis but still on two crutches,” she said.

“You don’t want to remove either crutch, the fiscal or the monetary, until the patient can actually walk fine, and to do that means support well into the recovery.”

Get in touch ahead of your currency exchange to discuss the impact of GBPEUR exchange rates on your upcoming currency transfer.