GBPEUR Sees Low Volumes Ahead of Data

GBPEUR Moves Back Above 1.17 with Weak IFO

The GBPEUR exchange rate is flat on Wednesday after the morning trading session and the 1.15 level is still the pivot point. German consumer confidence was worse than analysts’ expectations, but traders were happy to ignore the gloom as Europe takes steps to reopen its economy. Tomorrow will start the show for the pound v euro exchange rate as German employment and inflation numbers will be released ahead of Friday’s GDP Q1 estimates for the bloc’s largest economy and the Eurozone.

GBPEUR has seen a quiet trading day with a very small range and will now wait for the Thursday and Friday data. Tonight also sees an interest rate decision from the Federal Reserve and this could shift markets if the Chair Jerome Powell adjusts market expectations for tapering.

Poland boosts stimulus hopes

Leaders in the European Union may be less concerned over the EU’s huge recovery funding plan as the path opened up for its approval.

The stimulus package has moved forward after the German Constitutional Court rejected a domestic challenge to the fund’s rollout, while the Polish government also smoothed the rollout for the package.

The ECB and France, in particular, have been vocal about the need for more stimulus measures and the original fund was under threat.

The fund’s approval was seen as a huge boost for Polish Prime Minister Mateusz Morawiecki, who aims to spend the country’s 85bn euro of the 750bn euro fund on reforms called the “New Deal for Poland.” The big chunks of money heading for the European economies will help to see the country’s stability in the months and years ahead.

German data ahead for the GBP v EUR

High level European economic data will bring an end to the low volumes in the sterling and euro pair. The German economy is up again with the latest employment and inflation figures from Europe’s largest economy. Today’s -8.6 reading for consumer confidence against expectations of -3.5 was disappointing but the lockdowns are weighing on the consumer indicators. Businesses will start to get more confident as the European vaccine rollout gathers pace.

Inflation has been on the lips of investors again and this will be closely watched with the unemployment levels to watch for “stagflation” possibilities.

Friday will see the release of the latest growth figures for the German, Italian, and Eurozone economies in the first quarter. The Q1 flash GDP estimates should give traders more insight into the Eurozone’s ability to match the pound’s strong growth expectations. Estimates from an EY economist group and US investment heavyweight Goldman Sachs, saw UK growth rising to a potential 6-7% this year, which would trounce even the Bank of England and IMF upgrades. The EY club expects the best performance since 1941, to counter the worst year in 300.

The GBPEUR has an upside target of 1.18, while the 1.1280 level was stubborn for the pound’s breakout last year and will now play support.