- Pound (GBP) holds gains as covid cases fall
- UK manufacturing PMI beat forecasts
- Euro (EUR) under pressure despite solid manufacturing PMI figures
- EZ Q4 GDP up next
The Pound Euro (GBP/EUR) exchange rate is extending gains on Tuesday. The pair settled 0.25% higher on Monday at €1.1329 after easing back from a fresh 9 month high. At 05:15 UTC, GBP/EUR trades +0.05% at €1.1330.
Falling covid cases and an accelerating covid vaccination programme continued to support the Pound at the start of the new week. Covid deaths and new daily infections fall to the lowest level since December in the latest sign that the current lockdown restrictions are working.
Furthermore, the number of people who received at least one dose of the vaccine rose to 9.3 million. The effects of the vaccine rollout should start to show through in lower daily infections and deaths in 2 – 3weeks time.
Prime Minister Boris Johnson has directed ministers to ramp up preparations for reopening schools, which is expected to be one of the first measures to reopening the economy.
On the data front, UK manufacturing PMI beat forecasts in January and rose to 54.1. The outlook for the sector remains upbeat as covid restrictions are lifted, vaccines are rolled out and suppliers and exports adapt to a new post – Brexit environment.
There is no high impacting data due for release today. Investors will look ahead to the Bank of England’s monetary policy decision on Thursday.
The Euro remained depressed on Monday despite encouraging data from the Eurozone and particularly Germany. The German manufacturing sector upturn continued in January with the final PMI printing at 57, roughly inline with the preliminary figure.
Today attention will remain firmly on the economic calendar with the release of Eurozone Q4 GDP data. Expectations are for -1.2% quarter on quarter contraction as the resurgence in covid impacted the economy but not nearly as badly as it did in Q2. A stronger than forecast reading could help boost the Euro after several sessions in the red.