- Pound (GBP) supported by encouraging Oxford / AstraZeneca vaccine trial results
- BoE Haldane sustains optimism surrounding V-shaped recovery
- Euro rises then falls following EU Recovery Fund stimulus package agreement
The Pound Euro exchange rate is extending gains for a second session. The pair soared on Monday, settling +0.66% at €1.1069. At 05:15 UTC, GBP/EUR trades +0.1% at €1.1074.
The Pound rallied hard across the previous session following an upbeat coronavirus vaccine update from Oxford University and AstraZeneca. The first results from the Phase 3 vaccine trials show that the vaccine candidate is safe and provokes an immune response that lasts at least 2 months. The results mean that the UK could be a step closer towards ending the coronavirus pandemic, potentially even by the end of this year.
Adding to the Pound’s upbeat mood, Bank of England Chief Economist Andy Haldane kept hopes of a V-shaped recovery alive. He said that the UK economy has clawed back around half of what it lost in March and April. However, whilst he said that so far, the recovery has been a V, that is not to say that it will continue along the same course. Broadly speaking Haldane has been more upbeat about the UK economy than his peers.
Brexit talks resume today after recent disappointment. Expectations are low. Mike Pompeo is alsop in the UK boosting optimism surrounding US – UK trade talks.
The Euro sees a minor sell off after EU leaders agree on a massive stimulus plan to steer the region out of the coronavirus crisis. After 5 days of talks a deal was reached. The Netherlands, Sweden, Denmark and Austria had been opposed to two thirds of the Recovery Fund being grants and wanted the fund more heavily weighted towards loans. Of the €750 billion fund, €390 will be grants and the remainder repayable.
After a difficult first few months Europe has been better at containing the virus than the US with any flare ups in covid numbers quickly brought under control.
There is no high impacting Eurozone data due for release. Investors will remain focused on the Recovery Fund and sentiment going forward.
