GBP EUR Exchange Rate Hits Yearly Highs Again

GBP EUR Higher as German Inflation Hits 5%

The GBP EUR exchange rate finally returned to the April highs at 1.18 on Friday and that sets the pair up for a run to the 1.20 level. The euro is not seeing any support from economic data due to the lag in their reopening and last week’s BoE rate update also hinted at a quicker pace to rate rises in the UK.

The GBP to EUR trades around 1.1790 and will look to economic data on the week for further gains with a GDP update on Thursday.

Pound supported by Bank of England taper plan

Sterling is still seeing support from the Bank of England’s interest and monetary policy update last Thursday. The BoE kept its key interest rate at 0.1% but talked of “modest tightening” of its bond buying stimulus measures. That is still not expected to happen until some time in 2022 or 2023.

Traders were hesitant at first, but later realised that a slow pace to tightening is still going to be ahead of the ECB’s plans and the GBP v EUR is trading accordingly.

The week ahead sees ZEW sentiment figures for the EU and Germany, but that is unlikely to affect the pair and the pound should see buyers into Thursday’s GDP update.

Virus case numbers would be the only risk to the pound sterling at the moment and cases were rising at a steady pace into the end of last week, so there appears to be no imminent risk on that front. It was previously stated that the country should be beyond the worst of the virus by late-September.

Europe catches up to US on vaccines but lags UK

Despite making a slow and painful start to its vaccination campaign, the European Union has caught up to that of the United States, where the slowdown of the country’s campaign has contributed to a return of the virus.

In mid-February, less than 4% of EU citizens were partially vaccinated against the coronavirus, compared to nearly 12% in the U.S, according to Our World in Data.

The EU has now passed the US, with around 60% of the bloc’s residents receiving at least one jab, versus less than 58% of Americans. In Italy, up to 63% of people over 12 are now fully protected.

“I said that I don’t want to celebrate successes, but it must be said that Italy has inoculated more doses per 100 inhabitants than France, Germany, the United States,’’ the Italian PM said last week.

Residents in Italy must now provide proof if they want to eat at restaurants, use a gym or attend live music and that has seen further protests in the country, alongside France, where citizens are also pushing back on the passports.

The European vaccine rate has caught up to the US and UK but the economy lags after the time taken and the euro is seeing little supporters.