GBP/EUR Exchange Rate Down as Markets Fear Vaccine Shortages
After climbing for most of the week so far, the Pound Sterling to Euro (GBP/EUR) exchange rate has been tumbling again today. Pound (GBP) investors have been spooked by reports suggesting that the UK’s vaccine supply could see EU intervention.
Since opening this week at the level of 1.1241, GBP/EUR has been trending with an upside bias. Yesterday, GBP/EUR touched on a high of 1.1344 – the best level for the pair in over half a year.
However, GBP/EUR has since tumbled again. While GBP/EUR has sustained most of this week’s gains, concerns over Britain’s vaccine supply could lead to lasting downside pressure in the outlook if it is not resolved.
At the time of writing, GBP/EUR trends in the region of 1.1279 after shedding around half a cent from yesterday’s best levels.
Pound (GBP) Exchange Rates Hit by Fears that EU Could Interfere in UK Vaccination Rollout
Investors sold the Pound from its best levels today. It came amid fresh concerns that the EU could potentially interfere with the UK’s coronavirus vaccination rollout, due to a row between the EU and AstraZeneca.
The EU has been pressing AstraZeneca as the EU’s coronavirus vaccine shipments see massive delays. One EU source even reportedly said the UK has ‘more than enough’ jabs, in a suggestion that the UK send some to other countries in Europe.
Markets saw the comments as a signal that Britain’s vaccination rollout could somehow be interrupted or slowed.
Still, officials continued to take optimistic outlooks today. UK Prime Minister Boris Johnson said he was ‘very confident in our contracts’.
As a result, the Pound’s losses are limited for now.
Euro (EUR) Exchange Rates Appealing on Rival Weakness and Inflation Outlook
The Euro (EUR) is seeing a slight rebound from its weekly lows today, as investors find it more appealing than weaker rivals.
Losses in the Pound and US Dollar (USD) are helping the Euro to strengthen today. According to European Central Bank (ECB) Governing Council Member Olli Rehn, the Euro may also be benefitting from the Eurozone’s inflation outlook. He said:
‘One reason for Euro strength might be inflation outlook.
Clear, symmetric inflation target may boost expectations.’
Still, demand for the Euro is limited overall. Concerns still persist over the EU’s coronavirus vaccination issues, which has seen unexpected supply shortages.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Vaccination Developments, German Growth
Movement in the Pound to Euro exchange rate may remain mixed and volatile until there is a clearer outlook for the UK and EU coronavirus vaccine situations.
If AstraZeneca is able to resolve supply issues or reaches an agreement with the EU, market panic over the issue could soften. As Britain’s vaccination scheme is ahead of other major economies, this is likely to boost the Pound.
Of course, good EU vaccination news would be good for the Euro as well. Either way, the Pound to Euro exchange rate may struggle to reach new multi-month highs for now.
If tomorrow’s upcoming Eurozone data impresses investors, this could also boost the Euro and weigh on GBP/EUR.
Tomorrow will see the publication of key German unemployment and growth rate results. Strong German growth stats could boost hopes for Eurozone economic resilience and the bloc’s outlook.
Pound to Euro (GBP/EUR) exchange rate investors will also keep a close eye on developments in UK and Eurozone infection rates.