GBPEUR Could See a Quiet Start Before German Data

GBPEUR Looking to Test Monthly Highs

The GBPEUR exchange rate could see a quiet start to the week with two German data releases due on Tuesday. Europe’s largest economy will see the latest GDP and IFO business climate numbers, while the UK will have the latest public sector borrowing figures. The UK is expected to see borrowing at £32bn for the month.

The GBP to EUR trades at 1.1610 and the pound is still looking for gains that could test the yearly high at 1.18.

Germany bans Britons over variant

Germany has declared the UK a ‘virus variant region’, which means that travellers from Britain and Northern Ireland will have to quarantine for 14 days. The news comes a week after Germany said that Britain was a “risk area”, as cases of the so-called Indian variant continue to grow. The strain of the virus has been spreading in the UK, with more than 3,400 cases now identified.

The move is fairly speculative as Germany is on the UK’s amber travel list, which means that Britons should not be going on holiday there, and those returning to Britain would need to quarantine for 10 days or pass a test-to-release program. Travelling there and back would be a pointless endeavour.

Beer gardens, cafes and restaurants in Berlin have begun serving customers outdoors for the first time in months, provided they present a negative COVID test or a vaccine certificate. France has moved to similar rules as the Eurozone seeks to follow the UK’s lead and allow its services sector some much-needed revenues.

Meanwhile, a study by Public Health England has found that the Pfizer coronavirus vaccine is 88% effective against the latest Indian variant after the suggested two doses.

German data will drive GBP to EUR

Tomorrow sees the release of data from Europe’s largest economy, with German GDP and IFO business climate numbers.

The key release will be the GDP data, where a -3% loss is expected for the year-on-year growth. This would be a revision from the previous forecast of -3.3%. There are hopes that the Q2 figures will be good after a recent bounce and any improvement in the Q1 number will boost the euro.

The UK will also see public sector net borrowing figures with government borrowing in April said to be £-32bn. Previous figures showed that the government borrowed a record £303bn in the first full year of the pandemic. The Office for National Statistics (ONS) said that the deficit for the 2020-21 year was £24bn less than what they had originally forecast ahead of the budget.

Germany’s IFO data is also likely to bounce alongside other recent sentiment releases and that should filter into data over the coming months with a recent rebound in activity for Europe.

The GBPEUR has support at 1.1600 and the week ahead and tomorrow’s data will determine whether the yearly highs are achievable for sterling versus the euro.