The GBPEUR exchange rate was 0.30% higher at lunchtime on Wednesday after the bounced from yesterday’s drop below 1.1550. German consumer confidence will feature tomorrow, but there is no other data into the weekend and the pound would need a catalyst to get above 1.1600 as the year’s uptrend struggles to hold.
GBPEUR is trading at 1.1580 after it opened around 1.1545.
CBI sees opportunity to rebalance the economy
The Confederation of British Industry (CBI) has released a new report which said 2021 must be a ‘turning point’ in economic policy to avoid the mistakes made after the 2008 global financial crisis.
The suggestions from the CBI include developing local economic ‘clusters’ to make the economy more regionally balanced, introducing a ‘Learning for Life’ skills levy, and higher R&D spending.
“We know from past crises that a failure to act today, risks a far higher cost tomorrow – with the potential for both the social and economic impacts of this pandemic, especially on those groups hardest hit, to leave generational scars,” the CBI warned.
“This year must be a turning point. Future generations will judge us on the road we choose next. The economic history of nations shows that the decisions we take, the plans we develop and the actions we set in motion in the coming weeks and months will cast a long shadow,” the report added.
The group said that renewable energy was a potential sector for increased revenues and that businesses should export more overseas. Around 80% of SMEs only sell to domestic markets, while only 14% of UK exporters are ‘superstars’ compared to 40% in Germany.
Indian variant creeps across the UK
The Indian coronavirus variant is threatening to hamper the last phase of Boris Johnson’s lockdown easing which is due to occur in one month.
Eight areas of England had advice amended on Tuesday evening as cases of the variant increased and this is still weighing on the pound. The latest advice tells people in affected areas to minimise their travel in and out of the area, which has caused some outrage with the government being criticized for “stealth lockdowns”.
There have been more than 5,000 cases of the Indian variant in England and more than 400 in Scotland, Wales and Northern Ireland, according to recent data.
The situation continues to weigh on the pound sterling versus the euro, but the figures are deceiving. Boris Johnson has said that the vaccines protect from the variant and the UK has seen a large majority of its citizens vaccinated. The latest figures show cases only and much of the vulnerable age groups will have been vaccinated already so clarity is needed on the new numbers and the country deserves it as the services sector reopens.
Pubs and restaurants have seen sales soaring this week as more than 60% of establishments have been able to reopen with the return of indoor activity on Monday.