- Pound (GBP) boosted upbeat Q4 GDP
- UK manufacturing PMI data due
- Euro (EUR) under pressure as France announces third national lockdown
- Eurozone manufacturing PMI data up next
The Pound Euro (GBP/EUR) exchange rate is pushing higher for a sixth straight session . The pair settled +0.2% higher on Monday at €1.1745, towards the high of the day a level last seen pre-pandemic. At 05:15 UTC, GBP/EUR trades +0.05% at €1.1750.
Data from the Office of National Statistics revealed that the UK economy bounced back more strongly in the fourth quarter than initially thought. The final reading of the GDP for the final three months of the year came in at 1.3%, above the 1% expected.
Despite the strong final quarter the UK economy contracted by 9.8% across 2020, which was slightly better than the -9.9% drop forecast. Even so, it was still the largest annual contraction in more than three centuries.
The ONS also noted that Britain’s current account deficit widened to £26.3 billion in the final quarter of the year, almost double the deficit in the third quarter. The loss came as many firms rushed to import goods before the end of the Brexit transition period.
Today the economic calendar will remain in focus with the release of manufacturing PMI data. This sector has been a bright spot throughout the pandemic. Activity in the manufacturing sector is expected to have expanded firmly again in March at 57.7.
The Euro has been under pressure as the covid situation on the continent continues to deteriorate. Frencg President Macron last night announced another national lockdown, the third national lockdown for France, which is due to go on for weeks. The latest lockdown comes as the vaccine rollout remains sluggish in the region.
Eurozone inflation data did little to boost demand for the common currency. The core consumer price index (CPI) which excludes more volatile items such as food and fuel unexpectedly declined in March to 0.9%, down from 1.1% and below the 1.2% expected.
Looking ahead, manufacturing PMI data could be supportive of the Euro. Aanalysts are expecting another strong month of activity.