GBP/EUR Exchange Rate Falls as France Eases Covid-19 Lockdown
The Pound Euro (GBP/EUR) exchange rate dipped this morning despite the single currency being subdued ahead of the European Central Bank’s (ECB) interest rate decision. The pairing is currently trading around €1.15.
Although the ECB is not expected to make any significant policy changes in April, EUR investors are concerned that the bank could express dovish concerns about the Eurozone’s economy.
The European Union (EU) has suffered from rising numbers of Covid-19 and struggles with its vaccination programme.
Nonetheless, now that France is lifting its coronavirus lockdown, Euro investors are becoming more hopeful for the Eurozone’s economic recovery in the coming months.
Gabriel Attal, the French Government Spokesperson, said:
‘This may be the peak of the epidemic, or close to it. Mid-May there will be a first step with the reopening of venues that have been closed, such as shops and some café terraces and cultural venues. I can confirm that this is what is planned.’
Eurozone markets are however remaining cautious, as the EU continues to struggle with its Covid-19 vaccination plan.
The EU’s vaccinations are trailing behind the UK, but, according to some commentators, the bloc could quickly catch-up.
Pound (GBP) Struggles Despite UK Economy Getting off to a ‘Roaring Start’ in 2021
The Pound (GBP) struggled against the single currency (EUR) today because of a lack of any notable UK economic data.
However, Professor Adam Finn, a member of the Joint Committee on Vaccination and Immunisation, said that the UK could see a ‘summer surge’ of Covid-19 infections because of the eased lockdown restrictions.
Mr Finn said:
‘The models that we’ve seen on JCVI clearly point to a summer surge in cases as the lockdown is relaxed, because there are still many people in the adult population who’ve not been immunised.’
The UK’s Covid-19 cases continue to fall, however, with the number of daily cases down by -95 compared to last week. Those hospitalised because of the virus has also fallen to 2,004, that’s -487 less than the previous week.
The German investment bank Deutsche Bank (DB) has also expressed confidence in the British economy, saying that it is off to a ‘roaring start’ in the first quarter.
Deutsche Bank’s chief UK economist Sanjay Raja commented:
‘It’s clear that we’re in for a strong Q2 bounce. High-frequency data has shot up since the UK entered the second stage of its lock-down exit.’
GBP/EUR Forecast: Could Downbeat Eurozone Economic Data Drag Down the Single Currency?
Pound (GBP) traders will be awaiting tomorrow’s publication of the latest flash Services PMI for April.
Any improvement in Britain’s largest sector would boost the GBP/EUR exchange rate.
Tomorrow will also see the release of the UK’s Manufacturing figure for April, which is expected to rise to 59.
Euro (EUR) investors will be eyeing tomorrow’s release of the preliminary Eurozone’s Composite PMI for April.
If this points to any significant downturn in the Eurozone’s economy, then the Pound Euro exchange rate would head higher.