The GBP EUR exchange rate was lower on Tuesday after making a surge towards the 1.2000 level. That was the high from 2020 and the pound sterling is being held back as traders await inflation data out of Germany. Figures from France and Ireland this week have seen price pressures stall and that may be the case for Europe’s largest economy.
The GBP to EUR is trading at 1.1962 after giving up some of yesterdays’ gains.
PM Johnson says the country can ride out the virus without curbs
The pound sterling was boosted by comments from Prime Minister Boris Johnson who said the country can ride out the Omicron variant without further restrictions.
However, the Prime Minister said that the NHS was moving to a “war footing” and acknowledged the health service was under “huge pressure” as cases surge.
England’s worst-hit NHS trust saw the patient numbers up by 277% in a month due to the Omicron variant. Latest figures also showed that the 20 worst-affected trusts saw a rise in patients being treated for the virus in the month to December 28.
Despite this, governments are tinkering with the rules and Scotland has seen its isolation period cut from 10 days to 7. These types of rule changes can help to keep the economy moving as cases are surging but the variant has shown to be mild and many are being asked to avoid testing if they have no symptoms.
The UK economy has no major economic data this week and is hinging on the path of government restrictions.
Irish inflation holds steady at 3.9%, house prices gain 10% on year
German inflation figures will be the big economic number today and Ireland saw its inflation rate stay steady at 3.9%.
Higher German numbers would pressure the ECB but the French number was also flat this week and virus restrictions may be adding a deflationary effect.
Ireland’s service sector growth was seen to have eased sharply in December, according to survey data from IHS Markit on Wednesday. The AIB Ireland services Purchasing Managers’ Index dropped to 55.4 in December from 59.3 in November. The figures marked the country’s weakest performance since March.
Other data saw a 9.7% increase in asking prices for residential properties in 2021, alongside a record low of 11,300 homes listed for sale on MyHome.ie. In Dublin, the rate of asking-price inflation was up by 7.4%, and by 10.6% elsewhere in the country.
“The unwelcome message from this quarter’s MyHome report is that there is little sign of conditions easing,” said Conall MacCoille, Chief Economist at Davy and the author of the report.
“Prices also rose by an uncharacteristically sharp 1.2% in Q4 during the normally quiet winter months,” he said, adding that this is reflective of the “market grinding tighter, with the stock of homes listed for sale having fallen to a fresh historic low”.
The UK also saw house prices gain by 10% on the year, but the market is expected to cool in 2022.
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