The GBPEUR exchange rate sank -0.62% on Monday despite the UK removing all virus restrictions. We said in yesterday’s article that the pound could drop ahead of the ECB meeting on Thursday and that is what has happened. Sterling had too many attempts at the 1.1700 level and failed to capitalize with a move to the yearly highs.
The GBP to EUR now trades at 1.1580 and there is no major economic data ahead of the ECB rate decision. Sterling is reacting to the fact that Boris Johnson is self-isolating on his own freedom day, while half a million have also been asked to stay at home.
UK hit by ‘pingdemic’ shambles
UK Prime Minister Boris Johnson has been ordered to fix the ‘pingdemic’ shambles that is forcing over a million people to self-isolate on the country’s so-called Freedom Day.
There are demands for the Test and Trace isolation to be immediately ditched for the vaccinated as businesses face crippling staff shortages caused by the pinging of close contacts of those who test positive.
Tens of thousands of users are now deleting the NHS app after a cases spike meant large numbers, particularly in cities, were being told to self-isolate at home despite having no symptoms. The pingdemic situation has cast a cloud over the so-called Freedom Day, which got underway early as huge queues of Britons entered clubs at midnight.
Cases were still rising in the UK as reports said that virus hospitalisations have risen by 44% in two weeks. Almost 40,000 infections were recorded on Monday just as all legal virus restrictions came to an end on the Prime Minister’s ‘Freedom Day’.
Travel shares taking a hit on virus cases
European shares fell on Monday and travel stocks hit February lows as fears grow over the fast-spreading variant cases that could hamper travel demand and slow the global economic recovery. Europe’s travel and leisure index dropped by 2.9% to the lowest levels since mid-February.
There are no economic releases ahead until Thursday when the ECB will meet again to announce their interest rate and monetary policy. The continent’s reopening has lagged behind that of the UK and US, so there is unlikely to be any hawkish tone from the European Central Bank.
Recent comments from the bank’s President Christine Lagarde also sought to downplay the rise in inflation.
“Two percent is not a ceiling,” Lagarde said. This is to avoid any tapering talk when European inflation follows other nations higher. For the week ahead, the virus will dominate once again.
The GBP versus the EUR rate had the 1.17 level in its sights but too many failures to get above there has seen a swift pullback. The pound is likely to consolidate as the good news seems to have been priced-in to sterling. The next significant support levels are at the 1.1480 – 1.1500 levels.