- Pound (GBP) steadies after a steep sell off on Monday
- UK entered into lockdown which could last until the end of February.
- Euro (EUR) supported by weaker US Dollar
- German retail sales & unemployment figures in focus
The Pound Euro (GBP/EUR) exchange rate is edging mildly higher on Tuesday after a steep sell off on Monday. The pair dropped lower in the previous session, settling on Monday -0.8% at €1.1080, 100 pips off the high of the day. At 05:15 UTC, GBP/EUR trades +0.1% at €1.1080.
The Pound came under pressure in the previous session but has since stabilised off the lows after British Prime Minister Boris Johnson confirmed another national lockdown for England. The UK went into total lockdown from midnight last night and it is expected to last until at least the end of February. An easing of restrictions is conditional on the vaccine rollout succeeding.
The move threatens to devastate hospitality and retail businesses and raises the chances of the UK tumbling back into a double dip recession.
The news came following data which revealed that the UK manufacturing sector hit a three year high in December. Factories rushed to complete orders before the end of the post Brexit transition period on December 31st. The manufacturing pmi rose to 57.5 in December, up from 55.6 in November.
There is no high impacting UK economic data due for release today. Pound investors will continue to focus on covid developments and vaccine rollout news.
The Euro has been well supported in recent session despite covud cases rising and lockdown restrictions tightening, thanks to the softer tone surrounding the US Dollar. Germany is expected to extend its national lockdown which started in December.
German retail sales for November are expected to show a -2% decline month on month following a 2.6% increase in October. This figure is onlky likely to deteriorate further in December amid national lockdown conditions.
German unemployment will also be in focus shedding some light on the health of the labour market in the Eurozone largest economy.