The GBP EUR exchange rate was higher into the weekend after the Bank of England surprised some analysts with a 0.15% rate hike on Thursday. However, the weekend saw an emergency cabinet meeting for the British government, while the Netherlands goes into another lockdown.
The GBP EUR started the week at 1.1756 after testing 1.1800 last week.
Lockdown fears grow in the UK after cabinet meeting
Lockdown fears grew in the UK after PM Boris Johnson called an emergency cabinet meeting at the weekend.
The Cabinet call comes after a surge in virus variant cases, with Politico’s Alex Wickham tweeting: “Told emergency Covid Cabinet call happening in next few hours. Cabinet sources expect they will be primed for the possibility of further restrictions.”
A BBC report had also leaked minutes of a meeting of the Scientific Advisory Group for Emergencies held on Thursday which called for tougher restrictions imminently.
Wickham said of that: “Cabinet will get a data briefing from scientists – new SAGE advice yesterday said new measures were needed per BBC leak.”
It comes after reports have said that a two-week circuit breaker lockdown after Christmas is being planned. The Times reported that early regulations were being set out which would ban meeting others indoors except for work, while pubs and restaurants would be restricted to outdoor service only.
The Leaked minutes from Sage, reported by the BBC, said more stringent measures needed to be brought in “very soon”. They have also warned against delaying further restrictions until 2022.
Stephen Reicher, professor at the University of St Andrews and member of SAGE told Times Radio that the time to act was now.
Prof Reicher said “all the science suggests that Plan B is not going to be enough”.
He added: “The only way really, or at least the most effective way, we can have an immediate effect is to decrease the number of contacts we have.”
“In many ways, the most effective way of diminishing contact is to have a circuit-breaker.”
ECBs Lagarde is living in a different move, Ifo official
Former Ifo President Professor Hans-Werner Sinn spoke to CNBC about inflationary pressures in Germany and Europe and what he views as the ECB’s flawed monetary policy.
“We have a strong increase in consumer prices, but an astronomical increase in producer prices,” he said.
Producer prices have risen over 18% on the year, the highest level since 1951. Despite this, the European Central Bank still haven’t acted to tackle inflation with rate rises.
Sinn said that this will come through to wages next year and he said that the ECB had no data to suggest that it will not filter through.
Christine Lagarde said there will not be a rate rise next year and Hans-Werner Sinn said she was “in a different movie”.
He also pointed to the huge seven-fold increase in ECB assets since Lehman and suggested they are trapped with negative bonds that are hard to sell and that rate rises would pressure the governments who have also increased their debt levels.
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