GBP/EUR: Will Eurozone GDP Data Pull Euro Lower?
  • Pound (GBP) pressurized as UK covid cases hit record high
  • Lockdown to be released gradually
  • Euro (EUR) supported by weaker USD
  • Eurozone data dump including retail sales inflation

The Pound Euro (GBP/EUR) exchange rate is edging mildly lower for the fourth straight session. The pair settled on Wednesday down -0.3% at €1.1038, in the middle of the daily traded range. At 05:15 UTC, GBP/EUR trades a few pips lower at €1.1038.

The Pound is under pressure amid growing concerns over coronavirus. Prime Minister Boris Johnson warned that there would not be a big release of lockdown, but it would be a slow gradual process. The comments from the Prime Minister came as the UK recorded its highest ever number of new daily infections at 62,322. Whilst the death toll for the UK hit the grim 1000 mark. The numbers served as a stark reminder of the severity of the crisis as England and Scotland both headed back into lockdown this week.

There is no high impacting UK data due for release. The construction PMI is expected to tick marginally higher to 55m, up from 54.7 but is unlikely to move the market.

Yesterday data revealed that the dominant UK economy only made a subdued return to growth in December following the November lockdown. The composite PMI rose to 50.4 in December, up from 49 in November, whereby 50 separates expansion from contraction. With the UK once again in lockdown, a double dip recession looks unavoidable.

The Euro traded firmly versus its peers thanks to a weaker US Dollar, whilst overshadowing weaker than expected service sector data across the region. The Eurozone service sector PMI printed below the flash estimate at 46.4 in December, down from 47.3. With covid cases rising and countries across the region tightening lockdown restrictions the data is expected to deteriorate further before improving.

Looking ahead, German factory orders will be in focus. Analysts expect a -1.2% month on month decline in November, down from 2.9% the previous month.  Eurozone retail sales, consumer confidence and inflation will also be in the spotlight.