- Pound (GBP) supported by reopening measures
- BoE Andrew Bailey due to speak 15:00 UTC
- Euro (EUR) under pressure from stronger USD
- German industrial production and EZ Sentix data due
The Pound Euro (GBP/EUR) exchange rate is holding steady in early trade at the start of the week. The pair rallied 0.7% across the previous week, settling on Friday at €1.1613 just 23 pips off the high of the week. At 05:15 UTC, GBP/EUR trades at the same level of €1.1613.
The Pound remains well support by falling covid cases, rising vaccination numbers and the reopening of the UK economy. On Sunday the UK reported 82 new covid deaths, whilst new cases totaled 5,177.
Meanwhile the number of people who have received their first covid jab rose to 22.2 million. Today marks the first step in the reopening of the UK economy with school children returning to the classroom. Furthermore, a UK health official said that the emergence of new variants of the coronavirus shouldn’t derail the reopening plans.
Looking ahead Bank of England Governor Andrew Bailey is due to speak. This will be his last appearance prior to the BoE monetary policy announcement. Investors will be listening carefully for any clues on the central banks’ approach to bond yields, particularly after Fe Powell appears unmoved by surging yields.
Later in the week the monthly GDP figure for the lockdown month of January will be in focus.
The Euro came under pressure from broad US Dollar strength last week. Rising US treasury yields sent the US Dollar surging higher, hitting demand for the common currency.
More recently Eurozone macro data has been concerning as covid lockdown restrictions are extended until April in some countries. January retail sales plunged in both the Eurozone and Germany whilst the service sector remained in contraction in February. Slow progress in the vaccination programme is adding to the broadly gloomy perspective.
Later in the week the European Central Bank Monetary policy announcement will be in focus. The central bank is expected to keep rates on hold but could well up its rate of asset purchases to counter rising bond yields.
Today investors will watch German Industrial Production and Eurozone Sentix Investor Confidence releases.