The GBPEUR exchange rate is 0.16% lower on Thursday after the pair saw a new high for 2021 on Wednesday. German retail sales came in lower than expected but traders are shrugging off the lockdown-inspired weakness in light of recent sterling strength. There was also a raft of manufacturing PMI data this morning, with European figures largely in line, while the UK outperformed.
GBPEUR is trading at 1.1730 after posting a new high for the year at 1.1760 yesterday. Traders are happy to pause on the latest sterling surge and await further information.
German Retail Sales Signal Services Sector Woes
Latest figures from the German Destatis office on Thursday saw the country’s Retail Sales higher by 1.2% for the month, underperforming the 2% gain expected. On an annual basis, retail sales were -9% lower with analysts hoping for only a 6.3% loss.
The figures add pressure to an economy is struggling with high virus rates, while the UK in contrast, is set to reopen its retail stores soon in an attempt to patch up its own battered retail industry.
The morning also saw a host of manufacturing PMIs from the key economies with Germany, UK, Spain, and Italy posting updates for their respective sectors. All the European figures from Germany, Spain and Italy matched expectations. The highlight from a GBP v EUR perspective was a higher number for the UK at 58.9 versus expectations of 57.9. The UK will depend more on its services sector for GDP gains and traders are happy to sit on the current gains the pound sterling for now.
Stamer Sees Vaccine Passports Going Against “Instinct”
The opposition Labour leader Keir Starmer has said that vaccine passports issued to allow access to hospitality and entertainment venues would likely go against “British instinct”.
The UK government is currently looking at the idea of asking for proof of vaccination to access crowded spaces such as bars, restaurants and sports venues. Starmer said:
“If we get the virus properly under control, the death rates are near zero, hospital admissions very, very low, that the British instinct in those circumstances will be against vaccine passports.”
His statements come as MPs want the economy to open more quickly because of the lower rates of infection and the high vaccine rollout. It may hamper the recovery of the retail and hospitality sector if crowds are lower because of lower uptake in vaccinations below the vulnerable age groups.
Boris Johnson is also set to update Brits on the return of travel on April 5th and we could start to see countries showing up on a ‘green list’ and those with higher vaccine rates could feature. Travel experts have said Gibraltar, Malta, and Dubai would be among the ‘safe list’.
The GBPEUR will have no data drivers tomorrow, and no big-ticket economic releases for next week. The current trend of pound strength could continue and will likely depend on further reopening headlines.
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