The Pound to Euro (GBP/EUR) exchange rate is pushing higher this morning as UK lockdown easing optimism continues to drive Sterling sentiment.
At the time of writing the GBP/EUR pairing is currently trading at around 1.1717, as German inflation came in as forecast.
Pound (GBP) Heads Higher on Back of UK Lockdown Easing Optimism
Following the easing of some coronavirus restrictions in England yesterday the Pound continues to head higher against many of its counterparts this morning.
Prime Minister Boris Johnson led a press conference yesterday evening and reiterated to the public to remain cautious as the easing continues:
‘The vaccine rollout has been very impressive… but what we don’t know is exactly how strong our fortifications now are, how robust our defences are against another wave.’
‘What we need to do is to continue flat out to build the immunity of our population, build our defences against that wave when it comes.’
Professor Chris Whitty went on to comment on the prospect of another wave of the virus, saying:
‘If you get a very big wave, that would obviously lead to a significant impact. So that’s the reason why the prime minister and ministers have been absolutely determined that this is a slow and steady unlocking, looking at data between each step.’
Investors are increasingly optimistic surrounding the UK’s economic recovery as retail and some services reopen in two weeks’ time.
Euro Lower as German Inflation Rises as Forecast
The Euro was lower this morning before preliminary German inflation data for March met forecast by picking up to come in at 1.7%.
However, the Euro continues to come under pressure as the Europe suffers what could be the worst wave of coronavirus cases so far in the pandemic.
The German Bundesbank has abandoned any hopes for a rebound in the Eurozone’s largest economy this early in the year. The delayed vaccine rollout and lockdown restrictions continue to weigh on EUR exchange rates, the bank said:
‘Economic output in the first quarter of 2021 is likely to decline sharply, particularly in the contact-intensive service sectors.’
Furthermore, Eurozone consumer confidence remained in contraction at -10.8 for March, although the reading is the highest since February 2020 when the first lockdowns were imposed, consumer confidence is expected to plummet again heading into April.
The Eurozone’s economic sentiment index also rose to its highest levels since the pandemic began, although the next reading may suffer as the bloc suffers as coronavirus cases rise.
GBP/EUR Exchange Rate Forecast: UK Growth Data in Focus
For Pound investors tomorrow sees the final Q4 GDP data reading from the UK which is expected to come in at 1%.
If the data meets forecasts, the UK will avoid a double-dip recession and the Pound could see itself heading higher.
For Euro traders, the flash core inflation rate from the Eurozone for March is forecast to remain muted at 1.1%, which could cause trouble for EUR exchange rates as fresh lockdowns are imposed across the bloc.
German unemployment data could also pressure the Euro tomorrow, with a forecast of -10k due to ongoing restrictions in the country doing little to support the currency.