- Pound (GBP) snaps a 6 day winning steak on Thursday
- UK monthly GDP in focus
- Euro (EUR) strengthens post ECB, but eases back today
- German inflation & EZ industrial production up next
The Pound Euro (GBP/EUR) exchange rate is resuming its rise after a brief move lower on in the previous session. The pair settled 7 pips lower on Thursday at €1.1670 after once again struggling to pass resistance at €1.17. The move lower snapped a 6 day winning streak. At 05:15 UTC, GBP/EUR trades +0.1% at €1.1670. The pair is set to gain 0.5% across the week its second straight week of gains.
The Pound’s rally finally ran out of steam after an impressive run. The Pound has been supported across the week by a strong rapid vaccine programme, falling covid cases and first steps to reopening the economy.
This week has been particularly short on UK economic data. However, what was missed during the week will be made up for today. Today’s releases include manufacturing and industrial production and the monthly GDP reading for January.
The UK economy booked solid growth of 1.2% in December. January’s figure is expected to be considerably weak given the lockdown restrictions which were imposed at the start of the year. Activity in the service sector contracted sharpy in January. This doesn’t bode well given that the service sector accounts for 80% of British economic activity. The Bank of England has forecast that a 4% contraction in the first quarter of the year which could be rather optimistic given that non-essential retailers remain closed until 12th April in Q2.
The Euro gained across the board on Thursday following the European Central Bank meeting. As expected the ECB kept interest rates on hold. The central banks also reaffirmed the size of the Pandemic Emergency Purchase Programme to be €1.85 trillion.
However, the ECB announced that they would quicken the purchase pace significantly in Q2. The move comes amid growing concerns over rising bond yields. Given that the bank is just front loading the programme rather than expanding it the Euro shrugged off the news and moved higher.
Today German inflation data and Eurozone industrial production are expected to catch euro investors’ attention.