- Pound (GBP) sees heavy bout of profit taking
- BoE’s Andrew Bailey expects a GDP contraction in Q1
- Euro (EUR) showed resilience versus stronger USD
- Mid-tier data Spanish inflation, French GDP
The Pound Euro (GBP/EUR) exchange rate is tumbling for a second session. The pair settled 1% lower on Thursday at €1.1505 ending a nine-day winning streak for the Pound. At 05:15 UTC, GBP/EUR trades -0.35% at €1.1470, towards the low of the day. The pair is on track to lose 0.44% across the week but is still set to book gains of 1.6% across the month of February.
The Pound was one of the worst performing G10 currencies in the previous session. The Pound suddenly plunged in the US session as US bond yields surged and the US Dollar jumped. Investors looked to book profits after a tremendously strong month.
Comments from Bank of England Governor Andrew Bailey that he expects a contraction in the first quarter added to the negatove tone to the Pound
News flow was mixed. On the one hand, the chief medical officers in the UK lowered their covid alert level citing a reduction in pressure on the health services. This takes the UK another step closer to reopening the economy.
On the other, the cost of Britain’s furlough scheme reached £53.8 billion pound last month as the UK went back into lockdown for a third time. The number of jobs covered by the scheme rosae to 4.7 million by the end of January. The numbers have been revealed just days before Chancellor Rishi Sunak is due to set out the scheme’s future along with the UK Budget.
There is no high impacting UK data due to be released today. Investors could look towards a speech by Bank of England policy maker Ramsden.
The Euro showed more resilience in the face of a stronger US Dollar, boosted by upbeat German consumer confidence data. Consumer morale heading towards March picked up by more than forecast in the Eurozone’s largest economy, despite the ongoing lockdown.
Today there are several mid tier Eurozone releases such as Spanish inflation and French GDP which could attract investors’ attention but is unlikely to move the market.