The GBPEUR exchange rate opens the week at yearly highs above the 1.1850 level as traders price in the prospect of a December rate rise from the Bank of England. The coronavirus is rearing its head in the UK once more with cases surging above the 45,000. Reports from the weekend also suggest that Rishi Sunak is preparing an online sales tax for the country.
The GBP to EUR closed the week at 1.1848 and the key data for the week will be inflation for the UK and Europe.
Sunak and the treasury readying an online sales tax
UK Finance Minister Rishi Sunak is reportedly stepping up plans for an online sales tax, according to the Telegraph on Sunday.
Treasury officials have moved further ahead on a new e-commerce tax and are examining the outcome of a potential levy, including what goods and services will be covered. Businesses such as Amazon have been in the firing line in the past for using other domiciles as a means to avoid tax.
The move would also be welcomed by the high street after more of the country’s retail sales moved online. Rishi Sunak is also said to be considering a cut to the 5% rate of value-added tax on household energy bills, according to the Financial Times.
A 5% cut may not make much of a dent in the expected rise in utility bills after the recent gas price surge and the UK economy will still feel the pressure of a consumer squeeze in months to come.
The latest UK inflation figures are release on Wednesday and that could add to expectations of a near-term BoE interest rate rise.
Coronavirus case surge could threaten the pound sterling this week
The pound sterling versus the euro traded at the 1.1800 level twice this year, but both times the economic rebound was derailed by the virus. The weekend news that covid cases are up 23% in a week is not ideal for the British currency’s latest ascent.
It was reported that another 45,140 infections were recorded last week, with cases rising by over 35,700. The latest increase is the largest spread since July 20th.
Professor Tim Spector, lead scientist on the ZOE COVID Study app, said of the latest data: ” The UK seems to be slowly waking up to the fact that COVID cases are too high, but the reality is they’ve been soaring for months and many countries have put us on their red list.
“Infections remain high in young people, and look to be spilling over into the 35-55 year olds. If these increases creep into the over 55s it could spell disaster for the NHS this winter.”
The comments are the latest warning from scientists that the UK could face a bleak winter of rising cases.
In Germany, Germany’s Green Party voted to formally join talks to be part of the country’s next coalition government.
A swift conclusion to the German leadership vacuum would help the euro currency.