• Pound (GBP) consolidates gains as the UK takes another step to rer-opening
  • Covid cases drop by a third, deaths by 42%
  • Euro (EUR) under pressure amid slow vaccine programme
  • No data today, sentiment to drive Euro.

The Pound Euro (GBP/EUR) exchange rate is treading water at the start of the week . The pair advanced +0.3% across the previous week, closing on Friday €1.1687, after pushing as high as €1.1717 earlier in the week. At 05:15 UTC, GBP/EUR trades just a few pips higher at €1.1692.

The Pound remains well supported as the outlook for the UK economy is optimistic, despite recent data coming in rather mixed. UK inflation was weaker than forecast, dampening hopes of the Bank of England raising interest rates any time soon.

However, the strong vaccine rollout, declining covid numbers and economic reopening are keeping the Pound in demand. New daily covid cases in the UK fall by a third in a week to 3,862 whilst deaths drop 42% to 19. Meanwhile, more than 30 million Britons have had their first covid jab.

Today sees the UK take its next step along the re-opening roadmap with the UK’s stay at home order being lifted today. In England groups of 6 can meet outside. In two weeks’ time non-essential retailers will re-open. A strong consumer led recovery is expected this Spring as face-to-face services resume.

There is no high impacting UK data due to be released today. UK housing data and business investment numbers will be in focus.

The Euro, has not been holding up as well as the Pound. Europe, in contrast to the UK has experienced a slow vaccine rollout. The outlook for the bloc remains particularly gloomy as a third wave sweeps across the region. Countries such as Germany, France, Italy and the Netherlands have tightened or extended lockdown restrictions as covid cases rise.

Any signs that the programme is starting to ramp up could lift the Euro.

As there is no high impacting Eurozone data today sentiment is likely to drive the common currency. Tomorrow sees the release of Eurozone confidence data and German inflation figures.