Pound Falls as UK Announces a Ban on Quarantine-Free Travel
The GBP/EUR exchange rate fell by -0.3% today, with the pairing currently fluctuating around €1.12.
Sterling fell today following news that the UK had banned quarantine-free travel into the UK to keep out new variants of the coronavirus – such as those discovered in Brazil and South Africa.
This means that passengers flying in from overs seas will have to provide prove of a negative Covid-19 test before setting off.
Today also saw the announcement that the UK is now preparing to vaccinate those over 70-years old.
However, GBP investors are becoming increasingly concerned that a diminish vaccine supply could slowdown Britain’s vaccination programme.
UK Vaccine Minister, Nadhim Zahawi, said that the vaccine supply ‘remains lumpy’, adding:
‘[I]t remains challenging, you may have read over the weekend probably some of the challenges around Pfizer and of course Oxford/AstraZeneca – but I’m confident we can meet our target mid-Feb, [for] those top four cohorts.’
As a result, UK markets are remaining cautious as any delay in the Covid-19 vaccine supply would likely result in a further extension to the nationwide lockdown.
Nonetheless, news that London would be trialling 24-hour coronavirus vaccine centres has boosted confidence in Government’s historic rollout.
Euro Rises Despite Italy’s Political Crisis
The Euro rose against the Pound today despite demand for the safe-haven single currency suffering following news that China’s economy had picked up speed.
However, Lee Hardman, an analyst at MUFG Bank, said that China’s retail sales could take the shine off the nation’s economic recovery in the last quarter.
‘The pockets of weakness remain a concern and question the sustainability of the strong recovery.’
Meanwhile, Italy’s political crisis is also weighing on Eurozone sentiment today, after last week saw Matteo Renzi pull his Italia Viva party from the ruling coalition.
Analysts at Reuters said:
‘Renzi pulled out of the coalition government on Wednesday, presenting a long list of grievances about Prime Minister Giuseppe Conte and plunging Italy into political chaos as it battles to overcome the coronavirus pandemic.’
EUR investors will be monitoring today’s Eurogroup meeting.
If the European Central Bank (ECB) or any key policymakers are dovish about the currency’s performance, then we could see the single currency suffer.
Pound Euro Forecast: Could a Bullish BoE Boost Sterling Tomorrow?
Euro traders will be awaiting tomorrow’s publication of the latest German CPI data for December.
Any indications that the Eurozone’s largest economy is struggling to recover from the initial impact of the Covid-19 epidemic would be EUR-negative.
Tomorrow will also see the release of January’s German ZEW Survey of Economic Sentiment.
If this picks up, however, we could see the EUR to GBP exchange rate edge higher.
Pound investors will be monitoring tomorrow’s speech from the Bank of England’s (BoE) Chief Economic, Andrew Haldane.
If Haldane is notably upbeat about the UK’s Covid-19 vaccine rollout programme, then Sterling would head higher.