• Pound (GBP) supported by accelerating vaccine rollout
  • Manufacturing & service sector PMIs in focus
  • Euro (EUR) looks to PMI data
  • ECB left policy unchanged

The Pound Euro (GBP/EUR) exchange rate is. The pair settled +0.1% at €1.1285 on Thursday after climbing as high as €1.1325 earlier in the session a fresh 8 month high. At 05:15 UTC, GBP/EUR trades -0.2% at €1.1258.

Whilst covid numbers remain elevated in the UK, they are falling and show signs that the latest lockdown restrictions are starting to work. This along with news that over 360,000 perople were vaccinated in the UK yesterday against covid is helped to underpin sterling on Thursday. The economic recovery is directed linked to covid vaccine distribution. Ministers are currently saying that lockdown restrictions could start to be eased

Today there is plenty of data to grab investors’ attention. UK retail sales for December are expected to show 1.2% growth month on month after declining -3.8% in November, the UK’s second national lockdown. In December there were Tier restrictions, however there would also have been plenty of pent up demand after the November lockdown so a strong print could be on the cards.

Manufacturing and service sector PMI data will also be in focus with the flash January estimates. The manufacturing sector has been a bright spot throughout the pandemic and activity is expected to remain solid at 54.

The service sector is expected to fall deeper into contraction as the UK started its third national lockdown in January. Analysts forecast a reading of 45, down from 49.5 in December.

Manufacturing and service sector data will also be in focus for the common currency. Again in the Eurozone, the manufacturing sector is expected to show resilience remaining firmly in expansionary territory. A PMI reading of 54.6 is expected just down marginally from December’s 55.2.

The service sector, which is most impacted by lockdown restrictions is expected to remain deep in contraction at 45, down from 46.4.