The Pound to Euro exchange rate was gaining this morning as the vaccine rollout across the UK continues to reach daily targets.
At the time of writing the pair is currently trading at around 1.1425.
Pound (GBP) Bolstered By Vaccine Optimism
The Pound found itself supported this morning as optimism continues to grow over the success of the coronavirus vaccine rollout across the UK.
The UK remains on course to vaccinate 15 million of the most vulnerable members of the population by the 15th of February.
Lockdown restrictions remain in place until at least the 8th March when schools are hoped to reopen, and a gradual easing of restrictions can begin.
Investors are becoming increasingly confident that easing of restrictions will begin sooner rather than later, and the UK economy can begin to recover.
Surge testing has begun in South London today after a case of the South African variant of the virus was discovered, surge testing has been introduced along with fines and jail terms to help combat the spread of more infectious variants.
Euro (EUR) Struggles Despite Positive German Inflation
The Euro found itself struggling despite positive German Inflation data from January.
Annual inflation in the Eurozone’s largest economy, Germany, soared to 1% at the start of 2021, meeting forecasts. It is the first increase in consumer prices in 7 months.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said:
‘Inflation in Germany was lifted by both headline and core pressures at the start of the year. Food inflation rose by 2.2% and energy inflation rebounded. This component will increase further in the next few months, as base effects from last year’s collapse in oil prices turn, peaking in April.’
Euro losses have been limited however as the currency firms against the weakness of the US Dollar (USD).
The US Dollar has weakened as risk-on trade has affected safe-haven demand and the Euro has gained from the negative correlation in EUR/USD.
Pound to Euro Outlook: UK GDP Q4 Data in Focus
The Pound to Euro exchange rate will continue to be affected by any coronavirus developments, with any news that vaccination rollouts are further delayed across the Eurozone causing the Euro to fall.
Euro investors will be looking towards European Central Bank (ECB) President Christine Lagarde’s speech later today, with any dovish comments regarding the state of the Eurozone’s economies proving negative for the single currency.
Pound investors will be focusing on Governor of the Bank of England (BoE) Andrew Bailey’s speech this evening, with further hawkish commentary surround the UK economy providing support for Sterling.
Furthermore, Friday’s UK GDP Q4 data release will also give an insight into the state of the UK’s economy. UK GDP is expected to have grown in the last quarter of 2020 despite lockdown restrictions.