The British pound is higher against the euro on Monday.

A positive mood across markets buoyed on by hopes for more monetary stimulus in the United States and supported by some positive early stage coronavirus vaccine trial results helped lift the British pound.

The euro pulled back versus the pound but was higher elsewhere as markets digested comments from European policymakers on the ruling from the German constitutional court.

Pound to Euro exchange rate was higher by 51 pips (+0.49%) to 1.1224 as of 3pm GMT.

GBP/EUR wasn’t able to get as low as 1.115 in an early fall so turned around to move back beyond 1.12. Last week the exchange rate fell -2.22%.

GBP: Trades positively with risk sentiment

After tumbling out of the bottom of a month-long price range last week, the pound was able to take a breather at the start of the new week.

Fed Chair Jerome Powell saying over the weekend that more monetary stimulus will likely be needed hurt the US dollar and benefited the pound more than the euro. Dollar strength had been having the opposite effect on the pound in recent days.

At the same time, Powell forecast US economic might not rebound until the end of 2021 giving a boost to gold prices which hit a 7-year high.

EUR: Regling says ECB will not change approach

Managing Director of the ESM Klaus Regling came out today in support of the ECB today and taking an opposing view to his countrymen sitting on the German constitutional court. Regling said the ECB will not change its approach after the ruling. The ECB’s Lane also appeared to toe the party line, saying the ECB is only subject to the jurisdiction of the European Court of Justice.

The view in the market for now appears to be that nothing will come of the ruling, although with an acknowledgement that it might just be the starting gun in a long running battle for influence over the bloc’s monetary policy.

RKI in Germany estimates reproduction rate of 0.94, under the 1.00 threshold and not enough to dissuade German economic reopening.

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