- Pound (GBP) boosted by reopening optimism
- BoE’s Vlieghe sees accommodative stance for longer.
- Euro (EUR) under pressure as covid cases rise
- Eurozone economic sentiment data, German CPI up next
The Pound Euro (GBP/EUR) exchange rate is pushing higher on Tuesday . The pair settled +0.05% lower on Monday at €1.1694, after pushing as high as €1.1757 earlier in the session. At 05:15 UTC, GBP/EUR trades +0.1% at €1.1710.
The Pound remains supported by upbeat covid numbers which shows that the number of new cases and deaths remain low. High frequency data also revealed that the number of people heading to the shops rose by 6.6% compared to the previous week to March 27. The rise was in part thanks to Britons attending to their gardens ahead of the easing of lockdown restrictions.
Yesterday the UK took another step towards the economy reopening with groups of six allowed to meet outside.
The Pound fell off its highs following comments by Bank of England’s policy maker Gertjan Vlieghe who believes that the UK economy will still need help from the central bank to return to its pre-pandemic growth path. In other words, Vlieghe believes that accommodative monetary policy will needed for longer, which dragged on demand for the Pound.
Looking ahead there is no high impacting UK data due to be released today. Instead, sentiment is likely to drivet he Pound ahead of Wednesday’s Q4 GDP reading.
The Euro traded under pressure versus its major peers in the previous session in risk off trade. Rising covid cases in France and Germany were also weighing on the Euro. German Chancellor Angela Merkel threatened tougher lockdown restrictions in order to stem the spread of the virus. Meanwhile the vaccine rollout remains sluggish whilst is fueling fears that the economic recovery will be pushed back.
Attention will now turn to Eurozone consumer confidence which analysts expect to record -10.8. Meanwhile, the economic sentiment indicator is expected to show an improvement from 93.4 in February to 96 in March.
German inflation numbers are also due.