The Pound to Euro (GBP/EUR) exchange rate fell this morning as the coronavirus pandemic continues to ravage both the UK and Eurozone.
At the time of writing the pair is currently trading at around 1.13800.
Pound (GBP) Retreats as Coronavirus Fears Creep Back In
The Pound stumbled today as fresh fears over the coronavirus pandemic cause investors to be jittery about the currency.
Uncertainty over the South African variant of the virus has caused ministers to try and reassure the public that the AstraZeneca vaccine does work in protecting against the dominant variants in the UK.
Health Minister Edward Argar has said that there was ‘no evidence’ the vaccine was not effective at preventing severe illnesses.
Furthermore, from next week all travellers arriving in the UK will face two coronavirus tests, another measure to try and combat the spread of mutant variants into the country.
It comes as deaths caused by Covid-19 in care homes were at their highest last week since May 2020, during the first wave of the pandemic.
Euro (EUR) Supported by Weakening US Dollar (USD)
The Euro has found support this morning from the weakening US Dollar, however EUR gains have been limited by the continued slow vaccine rollout across the Eurozone.
The pullback in US Treasury yields and risk-on trade that have caused the US Dollar to weaken. US stimulus has fuelled the expectation of rising inflation, which affected yields and risk appetite, and allowed the Euro to gain.
However, these gains have been capped as the Eurozone struggles against its coronavirus situation, a delayed vaccine rollout has caused investors to shy away from the single currency.
Though with deliveries of the AstraZeneca vaccine finally making their way across the bloc, hopes for a successful rollout begin.
Pound to Euro Outlook: GDP Data to Bolster Sterling?
Pound to Euro exchange rate movement will continue to be dictated by any further coronavirus developments, if more cases of the South African variant are found in the UK, investors could sell out of Sterling.
There aren’t any notable data releases until the end of the week for GBP, Pound traders will however, be focused on Friday’s GDP Q4 data release which is expected to show a small growth for the end of the year despite coronavirus restrictions which could bolster GBP.
Euro traders will be keeping an eye on German inflation rate data tomorrow, which is forecast to show an increase in consumer prices at the start of 2021, the first rise in seven months which could boost EUR further.