The GBPEUR exchange rate is trying to hold onto the 1.1700 level again after the pair fell again on Monday. The British and European economies are very light on economic data until Thursday’s Bank of England interest rate meeting and sterling is feeling the heat.
The GBP to EUR trades around the 1.1697 after a drop in UK virus cases with the reopening but one scientist says the figures look “suspicious”.
UK case numbers ‘look fishy’
The UK saw a decrease of 30% last week in its coronavirus cases numbers but the data released by the UK government each day “looks a bit fishy”, according to a leading symptoms analyst.
Professor Tim Spector said the “sudden drop” in confirmed cases released by the government is “very suspicious”.
His own figures have shown that “around 60,000 cases a day” are being reported, while the official figures released by the government on Monday suggest only around 22,000 tested positive for the 24 hour period.
ZOE data shows new COVID cases have stopped rising for the last week and are holding steady around the 60,000 mark, Spector said.
“This is in stark contrast to the rapid decline in cases recorded by the government’s official confirmed cases data.,” he added.
“The drop is much faster than we’ve ever seen in previous waves, even after full national lockdowns, leaving the accuracy of the official tally in doubt.”
His comments fail to include the fact that there was little, or no vaccinations at the previous re-openings. Whatever the official figures, sterling was being supported by the drop in cases last week and case numbers will likely drive the pound versus the euro until Thursday.
Pound sterling could lack support ahead of BoE
Tomorrow will see some PMI figures for the UK and Eurozone countries, but these are final readings, and the market will have digested the outcome. EU retail sales for June are also released on Wednesday and that could have more of a repercussion for the pair. The market is expecting a drop from 9% to 4.5% in the European retails sales reading as the initial reopening bounce starts to fade.
The marquee event for the week is the Bank of England meeting on Thursday and after a few attempts to clear the 1.17 hurdle, the pound sterling is unlikely to see much support until then. The BoE will keep rates steady at the 0.1% level, but traders were keen to hear an update on tapering or rate rises, based on the recent inflation figures. The jobs market in the UK has also been steady.
Despite this, the recent virus uncertainty will likely give the bank a free pass to dodge the topic and investors may be disappointed.
ING bank said the rise in coronavirus variant cases would halt any hawkish sentiment from the Bank of England and they also see it as unlikely that the BoE will provide any tapering clues.