GBP/EUR: Pound Shakey vs. Euro Ahead of Brexit Bill Debate
  • Pound (GBP) advances paring losses from Friday
  • BoE rate decision on Thursday eyed
  • Euro (EUR) sees weak demand on slow vaccine rollout
  • German PPI & French inflation

The Pound Euro (GBP/EUR) exchange rate is advancing at the start of the new week extending gains from last week. The pair rallied 0.3% across the previous week, settling on Friday at €1.1644. At 05:15 UTC, GBP/EUR trades +0.15% at €1.1656.

The Pound pulled back from its highest levels towards the weekend as concerns over UK trade post Brexit dragged on demand for Sterling. Data revealed that whilst the UK monthly GDP was actually better than expected other numbers released on Friday were more concerning.

The monthly GDP reading came in ahead of expectations at -2.9% in January. Analysts has forecast a much deeper -4% contraction. However, trade data showed a record drop in UK-EU trade causing Brexit nerves to flare up.

Looking ahead this week sees a fairly light economic calendar with just consumer confidence and public data statistics due for release of Friday.

However, the Bank of England monetary policy announcement on Thursday is the most important risk event for Sterling next week. The central bank is not expected to make any changes to monetary policy but investors will be watching the bank’s tine carefully. Any sense of optimism as the UK vaccine programme continues and the economy reopens could boost the Pound.

The Euro lacked drive in the previous week, mainly owing to volatility in the US Dollar and the troubled vaccine programme in the EU. The slow rollout means covid cases are starting to rise again. Both France and Germany have warned of being on the brink of a third covid wave.

There are several key Eurozone releases expected across this week which could drive movement in the Euro.

Today sees the release of German wholesale prices and French inflation. Tomorrow brings the release of German and Eurozone economic confidence data, followed by inflation on Wednesday. Any signs that data is starting to improve, or more encouraging vaccine developments in the region could boost the Euro.