GBPEUR Posts Another New High for the Year

GBPEUR Posts Another New High for the Year

The GBPEUR exchange rate saw another new high for the year at 1.1774 on Thursday after manufacturing data from the UK outperformed the EU economies. Sterling has had another week of momentum as Europe’s currency struggles to catch a break.

The pound versus euro trades at 1.1750 on Friday morning and with no data releases today, it may be a quieter session.

France Nearing Third Wave Peak

France is said to be 7-10 days from the peak of a third virus wave, according to its health minister. Olivier Veran said in a France Inter radio interview that the country could hit a third peak over that time period after new restrictions were announced by President Macron.

Macron ordered the country into a third national lockdown during a Wednesday television appearance, saying schools would be closed for three weeks. The situation in the EU puts the UK in pole position for reopening and gaining a head start in start in growth that could be decisive in the months ahead.

The latest wave of cases will also reduce the amount of destinations that UK holidaymakers can visit when the ban on foreign travel is lifted in May. Boris Johnson is set to provide an update on travel this Monday, ahead of a global travel taskforce update a week later. MPs were hoping that he would loosen the restrictions now with the vulnerable age groups having had their two vaccines.

The decisions on foreign travel will determine whether Brits spend their lockdown savings at home or abroad, and that will filter through to the potential for retail sales and the hospitality sector in UK.

Weaker European Data for the Week Boosts Sterling

GBP v EUR was boosted this week by soft economic data from the Eurozone. German inflation figures were in line with expectations, but unemployment was higher, with a loss of -9k jobs against expectations of -3k.

Yesterday saw retail sales in Germany also worse than expected at -9%year-on-year, with analysts expecting -6.3%. In the manufacturing space, the country’s PMI came in at expectations, with the same outcome for Spanish and Eurozone figures. The UK was boosted by an improvement in manufacturing from 55.1 last month to 59.8 this time around. In Germany’s case, the manufacturing industry has held the country up through the pandemic, but this has not enough to boost jobs growth and Volkswagen were the latest firm to announce job losses as the carmaker looks to cut costs.

Core inflation was also lower for the Eurozone yesterday, with a reading of 0.9% against 1.1% expected. The numbers will please the European Central Bank and the UK may be the first to see inflation with its faster reopening.

The market may be quiet on Friday as traders await the Non-Farm Payrolls jobs number from the US. The GBPEUR has its next target at 1.20, which marked the high in 2020.

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