GBP/EUR Exchange Rate Rangebound Over Fears of the EU’s Banning of Covid-19 Vaccine Exports to UK
The Pound Euro (GBP/EUR) exchange rate held steady this morning following the publication of the German GfK Consumer Confidence Survey for April, which beat forecasts but remained low at -6.2. The pairing is currently fluctuating around €1.15.
The market research group GfK was cautious about the data, however, saying that intensifying lockdown measures would likely drag down consumer morale in the months ahead.
‘Instead, the survey period was characterised by the initial easing of the hard lockdown and stable or even slightly declining infection figures. A very similar development was also observed in the spring of 2020, when the hard lockdown was also relaxed.
‘With infection rates rising again and the lockdown will be tightened again, it is questionable whether the improvement in consumer confidence will continue.’
Euro (EUR) traders are also cautious ahead of the European Union’s (EU) vaccine summit today, where various EU leaders are due to decide on whether to ban vaccine exports.
Michael Hewson, chief market analyst at CMC Markets, comments on the situation:
‘Sentiment in Europe continues to remain fragile after German chancellor Angela Merkel was forced into a sharp U-turn over her decision to announce a full 5-day lockdown over the Easter period, as the German governments response to their rising crisis shows further signs of coming apart at the seams.’
Consequently, the Euro Pound (EUR/GBP) exchange rate is holding steady, with EUR investors remaining largely cautious as the Eurozone economy faces further challenges from the coronavirus pandemic.
Pound (GBP) Steady as UK Faces Covid-19 Threats Outside of UK Borders
The Pound Euro (GBP/EUR) exchange rate failed to rise today as concerns over the EU’s vaccine summit have dampened UK market confidence.
If the EU decide to ban crucial exports of the AstraZeneca vaccine to the UK, then we could see the Pound Euro exchange rate begin to fall as this would disrupt the Government’s vaccination rollout.
Jeremy Farrar, the director of the Welcome Trust, commented on the increasing risks facing the UK:
‘The biggest risk at the moment for the UK is outside the UK’s borders, actually. The epidemic is halving every 20 or 30 days in the UK, it’s coming down very quickly and the test trace and isolate system is now functional in the UK … So the biggest risk actually is new variants coming from anywhere in the world coming into the UK in the coming months.’
As a result, UK markets are remaining cautious as this could jeopardise the Government’s plan to ease lockdown restrictions indefinitely in the months ahead.
GBP/EUR Exchange Rate Outlook: UK Retail Sales Figure in Focus
Pound (GBP) investors will be looking ahead to tomorrow’s release of February’s retail sales figure.
Any improvement in UK retail sales figures last month would boost the Pound Euro exchange rate.
Euro (EUR) traders will be awaiting tomorrow’s release of Germany’s IFO Business Climate report for March.
If this improves and shows a marked uplift in German economic sentiment, then we could see the single currency head higher.
The Pound Euro exchange rate will remain sensitive to the EU’s verdict on vaccine exports this week, however, with any signs of AstraZeneca exports being suspended to the UK being GBP-negative.