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GBP/EUR Exchange Rate Struggles as German GDP Impresses

European Central Bank

The Pound to Euro exchange rate stumbled this morning as an unexpected growth in German GDP supported the single currency.

At the time of writing the pair is currently trading at around 1.1295.

Pound (GBP) Falters as Coronavirus Deaths Remain High

The Pound struggled against the Euro (EUR) today as the latter was supported by GDP growth data, and the UK remains jittery over the coronavirus pandemic.

The UK recorded a further 1,239 deaths yesterday as fears the country has not seen the worse of the second wave causes investors to be cautious of GBP.

However, this morning a fourth vaccine, made by Novavax which is to be produced in Teeside has been found to be 89.3% effective in protecting against the faster-spreading variant of the virus first found in Kent.

The UK has ordered 60 million doses of the vaccine, which still needs to be approved by Medicines and Healthcare products Regulatory Agency.

England’s Chief Medical Officer, Professor Chris Whitty tweeted about the vaccine, saying:

‘A highly effective vaccine to add to the medical countermeasures against COVID-19 trialled in the UK. If it gets MHRA approval this increases our future resilience, including against the B.1.1.7 variant. Many thanks to all trial volunteers and those who conducted the research.’

If the vaccine is approved for use in the UK, the Pound could be pushed higher as the mass vaccination rollout continues.

Euro (EUR) Firms against Better-Than-Expected German GDP Growth

The Euro found itself on the front foot this morning as German GDP data bolstered EUR.

The German economy expanded 0.1 percent on quarter in the last three months of 2020, beating market forecasts of a flat reading, meaning the country beat a double dip recession at the end of 2020.

The Euro was also supported from comments by European Central Bank (ECB) policymaker Governor Gabriel Makhlouf who kept a positive tone around the Eurozone economy saying:

‘[He] doesn’t see an ECB rate cut coming at the moment. But it is certainly an option if needed.’

Euro investors do remain cautious as the EU and AstraZeneca vaccine row continues.

Speaking to a German radio station this morning, European Commission President Ursula von der Leyen commented on AstraZeneca’s delay in delivering the vaccine, saying:

‘There is no plausible explanation. We want to be clear about that now. There are binding orders and the contract is crystal clear.’

Pound to Euro Outlook: Coronavirus Developments in Focus

In lieu of any notable data releases in the coming days, GBP investors will keep an eye on any coronavirus developments in the coming days, with any indication that the Novavax vaccine is to be approved supporting the Pound.

EUR investors will be keeping an eye on the Eurozone’s coronavirus developments, but will also be looking to Manufacturing PMI’s released on Monday which are expected to show small growths in the sector, which could push the Euro higher.