The GBPEUR exchange rate was rejected yet again by the 1.17 price level with the pair trading at 1.1675. German and Eurozone ZEW economic sentiment figures both came in much lower than forecast, while the pound is also getting support from the potential addition of new countries to the travel green list. UK minister Grant Shapps is also expected to update on the UK’s green list this week after pressure from travel and airline companies.
The GBPEUR has the yearly highs at 1.18 but the 1.17 level has been very stubborn lately.
ZEW economic sentiment slumps in Germany
The German ZEW Economic Sentiment Index for July came in worse than expected at 63.3 from 79.8 previously, missing estimates for 75.2. The Eurozone ZEW Sentiment also fell to 61.2 for the current month, 81.3 previously and expectations of 84.4.
ZEW President Achim Wambach said, “The economic development continues to normalize. The situation indicator for Germany has clearly overcome the coronavirus-related decline. Although the ZEW indicator of economic sentiment has once again fallen significantly, it is still at a very high level.”
“Financial market experts, therefore, expect the overall economic situation to be extraordinarily positive in the coming six months,” Wambach added.
Also released was Eurozone retail sales, which came in at 4.6% MoM and 9% YoY vs. 4.4% and 8.2% expected.
As the bloc’s economic rebound continued with the easing of coronavirus restrictions, Eurostat said sales of non-food products increased in May by 8.8% on the month after a 6.1% plunge in April, and surged 14.8% on the year.
UK should get clarity on travel list
Grant Shapps is set to unveil the latest government plans for UK travellers this week.
Countries which could be added to the UK green list include holiday hotpots like Spain, Portugal, Greece, Italy and France. Travel chiefs and airlines have demanded clarity after Boris Johnson failed to say when the new system would start.
But new health secretary Sajid Javid told MPs last night that quarantine-free holidays for vaccinated travellers would happen ‘very soon’.
Travel restrictions for all arrivals from the UK to Germany will also be eased from Wednesday this week after Boris Johnson’s recent meeting with Chancellor Merkel. There had been a plan for an EU-wide quarantine for the UK, but the German leader made a u-turn last week.
However, the UK reported the highest daily number of new infections since January 29th on Tuesday with over 28,000 new cases, up from 27,334 on Monday. The Prime Minister has committed to reopening fully on the 19th July but there is always a risk of a u-turn in the winter months.
The GBPEUR sees UK GDP updates this week with a three-month average figure for the economy in May. Friday’s release could be decisive as the pound flirts with the 1.17 level but keeps falling short.