The GBPEUR exchange rate is opening the week at the 1.1660 price level and is looking to get another push towards the 1.17 level. That level proved stubborn over the last two weeks and traders could try to get the pound sterling back to the yearly highs at 1.18.
The GBPEUR saw a small gain last week as inflation fears cooled and European data improved, particularly in Germany.
ZEW survey data will lead this week
Last week saw German unemployment and retail sales improve as the economic reopening kicked in further. The UK has seen some signs that the economic bounce is levelling off and that will also come for Europe. Rising variant virus cases have taken the wind out of the euros sail and is helping the pound to hold its strength despite the rise in UK cases.
The week ahead will see ZEW economic sentiment data on Tuesday for Europe and Germany with the German number expected to dip. This is because economists see the best of the rebound nearing its completion. A small improvement may boost the euro but the indicator may have a minimal effect.
Thursday will also have some European drivers with the latest ECB monetary policy meeting minutes. That could see some indication of the central bank’s thoughts on the inflation rise that is catching the attention of traders.
ECB policymaker Jens Weidmann said last week that the European Central Bank should not start tolerating higher inflation under its new policy framework. He added that such a move could be seen as a sign that they are trying to bankroll indebted governments.
Rising variant and lack of Brits hurts Europe
The summer tourism season in southern Europe’s economies is being hurt by a rise in the latest virus variant and travel hurdles keeping British tourists at home.
An EU virus travel certificate launched on Thursday may help some to take trips but arrivals to tourist hotspots from Portugal to Croatia are set to continue at lower than normal levels, putting businesses and hospitality jobs at risk.
“The recovery of tourism in Portugal has come to a halt,” Raul Martins, head of the AHP hotel association.
Britain also made a decision last month to cut Portugal from its “green list” and Germany also curbed travel to the country. Hotels are forecasting occupancy rates of just 43% this month and 46% for August, with AHP saying that the polling would be more downbeat if it was run now.
The situation is the same in Greece, where tourism is 20% of the economy. The country’s central bank this week cut forecasts for 2021 tourism revenues from 50% to 40% of those in 2019, where it welcomed a record 33 million visitors.
The GBPEUR could see the yearly highs tested in the next week or two if the data is supportive.