GBP/EUR Exchange Rate Edges Higher as BoE States it is ‘Not Out of Firepower’ to Help Economy
The Pound Euro (GBP/EUR) exchange rate rose by 0.3% today, with the pairing currently trading around €1.16.
Sterling rose today following comments from the Governor of the Bank of England (BoE) Andrew Bailey, who said that he was now ‘more positive’ about the UK’s economy in the months ahead.
He added:
‘We are not out of tools, we are not out of firepower.’
Bailey also played down the risks of a huge surge in inflation, saying that Government stimulus pushing up inflation to levels of 4% to 5% by the end of the year had not been included in the BoE’s forecasts:
‘My assessment so far is that that is consistent, I think, with the change in the economic outlook.’
In UK Covid-19 news, today saw daily cases fall by -559 compared to last week, while daily deaths are down by -30, with 52 deaths being reported.
Those in hospital currently stand at 8,029, down by -2,896 compared to the previous week.
Yesterday also saw the lowest number of coronavirus deaths since the beginning of October 2020.
Consequently, GBP investors are becoming more hopeful about the outlook for the UK’s economy.
Euro (EUR) Exchange Rate Sinks as Europe Faces Third Wave of Covid-19
The Euro (EUR) struggled today following a surge in coronavirus cases throughout Europe. A third wave of the virus has forced many countries, including France, Germany, and Poland, to undertake new restrictions.
Italian prime minister Mario Draghi commented:
‘More than a year after the start of the health emergency, we are unfortunately facing a new wave of infections. The memory of what happened last spring is vivid, and we will do everything to prevent it from happening again.’
As a result, EUR traders are now more concerned about the outlook for the Eurozone, which is already forecast to face a double-dip recession because of tight restrictions and a delay in rolling out Coivd-19 vaccines.
In Eurozone economic news, today will see the release of the latest German Wholesale Price Index for February. The figure rose by 1.4% month-on-month.
However, this was not enough to buoy confidence in the Eurozone’s largest economy, which has undergone extended restrictions on March to curb the spread of Covid-19.
GBP/EUR Exchange Rate Outlook: Eurozone’s ZEW Survey Data in Focus
Euro (EUR) traders will be awaiting tomorrow’s release of Germany’s latest ZEW Survey of Economic Sentiment for March.
Any improvement in the outlook for the Eurozone’s largest economy would be EUR-positive.
However, it’s likely we could see economic morale deteriorate in Germany, with the nation facing harsher restrictions as coronavirus infections continue to rise.
Tomorrow will also see the Eurozone’s ZEW Survey of Economic Sentiment for this month. The figure is expected to fall to 65.1.
As a result, we could see the EUR/GBP exchange rate continue to fall as the economic situation in Eurozone remains largely uncertain.
The GBP/EUR exchange rate will likely head higher this week as the outlook for the UK economy, by contrast to the Eurozone, continues to improve as Britain’s Covid-19 cases fall.
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