The GBPEUR exchange rate is flat on Tuesday after a quiet morning of trading. The pair is awaiting some key economic data from the Eurozone, with German employment and inflation numbers leading into Friday’s GDP Q1 estimates for the bloc’s largest economy and for the Eurozone.
GBPEUR will now wait for the data and it should determine whether the pound can continue its uptrend, or whether the EU catch-up story is warranted.
EU parliament set to finally ratify Brexit deal
The European Parliament is expected to formally approve the post-Brexit EU-UK trade deal, while further tensions between the two partners sours the mood.
The Trade and Co-operation Agreement (TCA) was implemented in January and has been working on a provisional basis, but the deal is expected to be ratified by MEPs later today
While the deal awaits the signatures, French Minister Clement Beaune has launched accusations against the UK, saying that they are blocking fishing rights. The minister warned of retaliations against the country in the financial sector.
“The United Kingdom is expecting quite a few authorisations from us for financial services. We won’t give any for as long as we don’t have guarantees on fishing and other issues,” Beaune said.
The statements are the latest spat between the two sides and there are likely to be more when economies start to deal with the damage from the virus lockdowns.
German data will guide the gbp to eur
European economic data will be the key driver of the pound versus euro in the next days and the German economy will start with consumer confidence on Wednesday. Sentiment has been hit by the ongoing restrictions and this number may not show anything too different from expectations, but it could lift the euro if consumers are positive about the months ahead after the EU upped its vaccination rates.
Data on Thursday will be a good benchmark for the GBP to EUR exchange rate as German unemployment will meet inflation figures in the country and it could paint a picture of bubbling prices amid stagnation in hiring or wages. Talk in the markets is coming back to inflation and the tapering of bond buying, although the ECB last week called any such talk “premature”.
Friday will bring the latest growth figures from the German, Italian, and Eurozone economies. The Q1 flash GDP estimates should let traders see how robust the largest economies are against data for the wider area. This will give investors an idea about whether the European economy can meet the growth expectations in the months ahead. The UK was expected to grow at 5.3% in the latest IMF estimate. The Eurozone was said to be lower and nearer 4%, but that will depend on the pace of reopening.
The GBPEUR has resistance at 1.18 and also has support at the 1.1280 level. These figures will have to see the 1.16 or 1.14 levels tested first and that could be this week.