• Pound (GBP) boosted by reopening optimism
  • Q4 GDP expected to confirm 1% QoQ growth
  • Euro (EUR) under pressure as lockdown tighten
  • Eurozone CPPI & German inflation in focus

The Pound Euro (GBP/EUR) exchange rate is treading water after four straight sessions of gains. The pair settled +0.27% higher on Monday at €1.1725, slightly off the high of €1.1733. At 05:15 UTC, GBP/EUR trades 3 pips lower at €1.1721.

The Pound has remained buoyant versus its major peers as the economic outlook continues to improve. The Department of health reported 56 covid deaths, down around 50% from last week. New daily infections fell by 25% to 4,040. The encouraging data means that the reopening of non-essential retailers and pub and restaurant gardens in just 10 days is looking very likely.

UK fourth quarter GDP data, the final revision, is due to be released today. The data is expected to show that the economy grew by 1% in the final quarter of last year, avoiding a double dip recession.

Even so, the UK will record an annual GDP contraction of -9.9%, marking its worst performance in 300 years. Investors are now firmly focused on the reopening of the economy making the Q4 reading feel slightly out of date.

The Euro has been out of favour in recent weeks as a third wave of covid spreads across the region whilst the vaccine campaign has struggled to ramp up. As a result, economies across Europe are extending or tightening lockdown restrictions. The prospect of a much slower economic recovery is denting demand for the common currency.

Economic data is showing a different story. Eurozone economic sentiment indicators rose by more than expected in March, surging to 101. This was up from 93.4 in February and was significantly better than the 96 than analysts had penciled in.

Germany recorded the largest jump in confidence, with the service sector also showing a surprisingly upbeat reading. The data suggests that participants are focusing on the reopening rather than the near term covid headwinds,

Today there is plenty of data for investors to digest, including Eurozone CPI and German unemployment.