- Pound (GBP) advances on upbeat mood, aided by vaccine hopes
- Investors look ahead to speech by BoE Governor Andrew Bailey and a slew of data due tomorrow, including UK GDP
- Euro (EUR) supported by upbeat sentiment in the broader market
- ECB meeting will be the central focus this week with a cautiously optimistic tone expected
The Pound Euro exchange rate (GBP/EUR) gained 0.6% across the previous week, settling at €1.1170, in its second straight week of gains. At 05:15 UTC, GBP/EUR trades +0.1% at €1.1174 ahead of what is expected to be a very busy week.
The Pound remained upbeat across the previous week as more lockdown measures were eased and despite little progress in Brexit talks.
Vaccine optimism is underpinning sterling at the start of the week after research undertaken by Oxford University suggests positive results and Professor Robin Shattock said that there will be enough vaccine for everybody in the UK in the first half of 2021 if trials are successful. A vaccine is considered the quickest and surest way for the economy to return to pre-covid normality.
Looking ahead this is a busy week for Pound investors. The immediate focus will be on a speech later today by BoE Governor Andrew Bailey and a barrage of data due to be released tomorrow, including industrial and manufacturing production and GDP data.
The UK GDP contracted -20.4% in April as the UK economy was deep in lockdown. However, those strict measures started to ease in May and the economy gradually started to reopen. Analysts are expecting to see a 5% increase in GDP n May month on month.
The Eurozone economic calendar is empty on Monday, leaving the Euro vulnerable to risk sentiment. The broad mood in the market is upbeat which is keeping the Euro buoyant as investors focus on the economic recovery over fears surrounding rising coronavirus numbers particularly in the US. Whilst the common currency trades lower versus the Pound, it is trading higher versus the US Dollar.
The main focus for Euro investors this week will be the European Central Bank meeting on Thursday. The broad expectations is that the bank will stay put on policy and offer a cautiously optimistic tone compared to last month’s dire projections.