Pound to Euro Exchange Rate Rises as Hopes Grow for Easing UK Lockdown
The Pound to Euro exchange rate rose today following news that Covid-19 infections in England had fallen by two-thirds in a month. The pairing is currently fluctuating around €1.15.
Mark Woolhouse, professor of infectious disease epidemiology at the University of Edinburgh, was optimistic about the drop in coronavirus cases, saying:
‘I think we do have reasons to be more confident that we can move out of lockdown swifter than we could have done out of the first one.’
Today also saw Chancellor Rishi Sunak back a cautious reopening and easing of the UK’s lockdown measures.
Reports suggest that Sunak’s March budget will reveal another Covid-19 rescue package with the view of a staggard reopening of the UK economy. Allies of Sunak’s say that he wants to avoid stop-start lockdowns going forward.
Hopes of the UK easing lockdown and continued confidence in the rollout of Covid-19 vaccines has also uplifted business confidence to a five-year high, according to a business confidence index compiled by the Institute of Chartered Accountants in England and Wales (ICAEW).
Michael Izza, the ICAEW’s chief executive, said:
‘Rising confidence among businesses is an encouraging sign of things to come and a predicted growth in employment is good news for people who have lost their jobs over the past year.’
Euro Sinks Ahead of ECB Minutes
The Euro fell today ahead of the European Central Bank’s (ECB) Monetary Policy Meeting Accounts, due out this afternoon.
EUR traders are remaining cautious, however, after the ECB President Christine Lagarde recently commented on the various risks facing the Eurozone’s economy.
Added to this, the European Union’s (EU) slow vaccine rollout is also dampening confidence in the single currency.
Former Belgian Prime Minister Guy Verhofstadt has criticised Europe’s slow rollout of the coronavirus vaccine, saying:
‘If you believe in Europe, if you love Europe, it’s your duty to be the most vocal critic, especially when Europe falls short of its potential and our expectations. That’s exactly what’s happening now with the vaccinations.’
‘Europe is no more, no less than the world leader in vaccine production today. More than 75 per cent of vaccines worldwide are produced in Europe. Nevertheless, there is a crucial lack of supply.’
As a result, single currency investors are remaining cautious ahead of the latest ECB minutes, as this could further underline the gloomy outlook for the Eurozone’s economy in the months ahead.
Could Weak Eurozone Economic Data Drag Down the Single Currency on Friday?
Pound traders will be awaiting tomorrow’s publication of the flash UK Markit Services PMI for February.
Any improvement in the UK’s largest sector would be GBP-positive.
Friday will also see the release of the latest UK GfK Consumer Confidence data for February, which is expected to remain in the doldrums.
However, we could see the gauge improve slightly with hopes of an imminent easing of lockdown restrictions.
Euro investors will be monitoring tomorrow’s publication of the flash Eurozone Markit PMI Composite, which is expected to rise to 48.
As a result, we could see the GBP/EUR exchange rate edge higher as the Eurozone’s economy is likely to remain in contraction territory until spring or even summer.