The GBPEUR exchange rate failed another time to hold gains above the $1.1700 level and the pair could head lower. Thursday will see the latest European Central Bank interest rate meeting and press conference.
The GBP to EUR has also been moving on the latest surge in virus variant cases and today is the long-awaited lifting of restrictions for Britain.
Deloitte sees UK consumer confidence at pre-virus levels
UK consumer confidence has bounced back to pre-pandemic levels in Q2 2021, moving higher by two percentage points from the previous quarter, according to the Deloitte Consumer Tracker. Confidence is seen at its highest level since Q4 2019 and has now increased by a record nine percentage points year-on-year.
The Deloitte analysis centred around a survey of more than 3,000 UK consumers between 18 and 21 June, which was the original reopening date.
Consumers were not only more confident about their own circumstances; they were also significantly more confident about the state of the UK economy. With the UK’s vaccination programme enabling the gradual easing of restrictions, sentiment around the state of the UK economy grew by 23 percentage points, compared to the previous quarter.
Debapratim De, senior economist at Deloitte, said of the figures: “The furlough scheme has been very effective in cushioning the economic blow to many individuals from the pandemic. The rapid recovery in consumer confidence and improvements in job security testify to its success. Vaccines and better weather are now enabling a more sustainable reopening of the economy. With an overwhelming majority of respondents reporting increased savings, the stage is set for a consumer-driven rebound in activity. We expect the six months between April and September to deliver greater growth than seen over the four years before the pandemic.”
The UK is moving forward with today’s so-called ‘freedom day’ despite reporting 48,161 Covid cases, which is up from the 31,700 cases recorded last Sunday.
ECB meeting will highlight data this week
There is no high level data for the pound versus euro pair this week until Thursday’s ECB rate meeting. The bank will obviously stay out on rates and with the economy being the curve on reopening, there is no rush to discuss tapering any more quickly than the UK or US economies.
Around two weeks ago, the European Central Bank was moving the goalposts on inflation, allowing more room to deploy emergency measures even if prices move above its official target.
The bank’s Governing Council said that it would no longer aim to keep inflation below, but close to, 2 percent, its target since 2003.
“Two percent is not a ceiling,” Christine Lagarde, the ECB President said during a news conference. The meeting on Thursday may not provide much fireworks after this comment.
The GBP versus the EUR rate had the 1.17 level as the important support level and it looks like the euro may begin a return to strength after almost a month of pound failures to beat that level.