The GBPEUR exchange rate was 0.30% higher on Tuesday with the pair eyeing the 14th July highs above 1.1750. That level was hit after the latest Bank of England policy statements, but the pair retreated on virus concerns. Wednesday sees more data for the German economy and that could determine whether the pound can get back to the yearly highs at 1.18 set in April.
The GBP to EUR trades at 1.1745 and today sees consumer confidence released for Europe’s largest economy.
PM urges caution on seventh day of lower cases
Prime Minister Boris Johnson has asked for caution despite Britain registering lower coronavirus case numbers for a seventh day in a row, a drop which continues to surprise health officials.
Infection rates across the UK have dropped for seven days with 23,500 new cases announced on Tuesday compared to over 46,500 just a week earlier – a drop of almost 50%.
The reversal comes despite the UK’s removal of almost all legal restrictions July 19th and it has confounded the government and its scientists, who had previously warned cases would surge after the restrictions were eased.
A government adviser has also said that coronavirus will be “mostly behind us” by late September or October in the UK.
Neil Ferguson, of Imperial College London, who was responsible for the first lockdown, said the course of the pandemic had fundamentally changed due to the vaccine rollout. However, he also warned that it would be some weeks before the impact of lifting restrictions in England would be felt.
The EU is also getting closer to helping the euro after the EU chief executive said the bloc has achieved its goal of delivering at least one coronavirus vaccine to 70% of adults.
Brussels puts hold on legal action against UK
Brussels has paused its legal action against the UK government as it attempts to de-escalate tensions over customs rules on Northern Ireland.
The European Commission said on Tuesday that it would freeze an infringement process which it launched in March over the UK’s breach of the terms of the post-Brexit Northern Ireland protocol.
The decision by Brussels to pause legal action comes amid rising EU-UK tensions over the rules designed to prevent a hard border in Ireland. The de-escalation will be another plus for the British pound. The commission commented that the move would help “provide the necessary space to reflect on these issues and find durable solutions to the implementation of the protocol”.
Economic data for the pound v euro will see German consumer confidence released on Wednesday, but the key figures will be Thursday with unemployment and inflation for the country. Friday then sees a German GDP update and Eurozone inflation numbers.
The GBP versus the EUR rate will now look to test the mid-July highs at 1.1750 and getting above there will target the 1.18 level, which was the yearly high set in April.