- Pound (GBP) boosted by vaccine & reopening
- UK economic calendar quiet
- Euro (EUR) looks to ECB
- No rate change expected, focus on bonds
The Pound Euro (GBP/EUR) exchange rate is extending gains for a seventh straight session. The pair settled 0.05% higher on Wednesday at €1.1677. Once again the pair failed to push beyond €1.1697. At 05:15 UTC, GBP/EUR trades +0.05% at €1.1683.
The Pound pushed higher across the board on Wednesday despite few fresh catalysts. The same factors continue offering support to Sterling. The UK’s rapid vaccine programme has meant that new daily cases have continued to fall and the death toll has also declined considerably to 190 yesterday.
Schools reopened this week, the first step in the 4 stage reopening plan laid out by the Prime Minister around 3 weeks ago. Provided this stage of reopening goes well and cases remain low, then stage 2 will begin on 12th April. This is when non-essential retail will reopen and hospitality venues can serve people outdoors. This is when the economy will really start to fire up again.
As far as data is concerned there are no major releases today. Tomorrow the monthly UK GDP reading will be closely monitored.
The Euro struggled in the lead up to the European Central Bank monetary policy announcement. This comes at a time when many countries in the bloc are still struggling with covid outbreaks and lockdown restrictions. Meanwhile the vaccine rollout is slow and marred with problems and macro data for the region is still well below desirable recovery levels.
The ECB is not expected to adjust interest rates tomorrow. The central bank has also said that they will keep their stance accommodative until inflation reaches the ECB’AS 2% target, which is still some distance away.
The focus is likely to be on the Pandemic Emergency Purchase Programme given the recent rise in yields. Some ECB members have suggested that the central bank should buy up more bonds. Recent data suggests that so far the ECB hasn’t been doing this.
Often the ECB try to talks down the Euro of interest rate expectations. Maybe today will be on the those days.