GBP/EUR Exchange Rate Rises as UK Prepares to Outline New Roadmap for Easing Lockdown
The Pound to Euro exchange rate edged higher ahead of Prime Minister Boris Johnson’s lockdown exit plan, due later today. The pairing is currently fluctuating around €1.15.
UK Vaccines Minister, Nadhim Zahawi, was confident about the new roadmap, which includes relaxed laws from March 8 that means two friends can meet for coffee outdoors and the reopening of schools.
Mr Zahawi said, ‘Suffice to say, the evidence looks good.’
Today will also see Boris Johnson likely announce the results of the effectiveness of the UK’s Covid-19 vaccination programme.
PA Media is also confident in the effectiveness of the Pfizer and Astra-Zeneca vaccines, commenting:
‘Scientists from the University of Edinburgh, the University of Strathclyde and Public Health Scotland examined data on people who had received either the Pfizer/BioNTech jab or the one developed by experts at the University of Oxford with AstraZeneca.’
‘By the fourth week after receiving the initial dose, the Pfizer and Oxford/AstraZeneca vaccines were shown to reduce the risk of hospital admission from Covid-19 by up to 85% and 94%, respectively, they found.’
As a result, UK markets are becoming more confident that the current lockdown could be the last, with Covid-19 case rates dropping alongside hospitalisations.
Currently 26.3% of UK adults have been vaccinated against the virus.
Euro (EUR) Stabilises as German Business Confidence Improves in February
The Euro stabilised against many of its peers today following this morning’s publication of the latest German IFO Business Climate data for February.
The figure beat forecasts, rising from 90.3 to 92.4.
Today also saw the publication of the German Expectations data for February which also beat forecasts at 94.2.
As a result, EUR investors are becoming more optimistic about the outlook or the Eurozone’s economy, despite the EU’s delay in Covid-19 vaccine rollouts.
Carsten Brzeski, an analyst at ING, commented on the data:
‘The latest Ifo index numbers show that optimism has returned to the German economy as many businesses seem to have joined financial markets in looking through any adverse short-term effects from ongoing lockdowns and the slow start of the vaccination rollout.’
However, Brzeski also urged caution, saying that what the ‘Ifo index shows is that German businesses have followed financial markets in looking through negative short-term effects from lockdown measures and slow vaccinations. Nothing more, nothing less.’
Consequently, the EUR/GBP exchange rate is near rangebound, as Eurozone markets are also remaining cautious albeit with a returning glimmer of optimism as reflected in the latest IFO surveys.
GBP/EUR Outlook: Could Rising UK Unemployment Drag Down the Pound?
Pound traders will be awaiting tomorrow’s release of the latest UK ILO Unemployment Rate report. If this shows an increasing amount of joblessness in the UK, then we could see Sterling begin to suffer.
However, Sterling could edge higher this week if Downing Street’s lockdown easing plan buoys confidence in the UK economy going forward.
Meanwhile, EUR traders will be eyeing tomorrow’s release of January’s Eurozone Consumer Price Index.
Any indications that the Eurozone could be struggling in the months ahead would be EUR-negative.