- Pound (GBP) steady despite weaker than forecast CPI
- Indian covid variant in UK unnerving investors
- Euro (EUR) showed resilience on improving vaccine outlook
- ECB rate decision due
The Pound Euro (GBP/EUR) exchange rate is edging a pips higher on Thursday . The pair settled just a few ticks lower on Wednesday at €1.1575. At 05:15 UTC, GBP/EUR trades approximately flat at €1.1577.
UK inflation rebounded in March from a depressed level in February, although it still came in short of analyst’s forecasts. Inflation, as measured by consumer prices rose 0.7% year on year, up from 0.4%. Analysts had pencilled in 0.8% increase. Rising transport and clothes prices lifted the index as business prepared to re-open.
Today the UK economic calendar is light. Investors could look towards covid and vaccine developments for cues. The UK continues to plough ahead with its rapid vaccine programme which has enable the UK economy to reopen. However, there are some concerns over the highly infectious Indian covid strain which has arrived in the UK.
Looking ahead UK retail sales data is likely to closely watched as the UK prepared for reopening.
The Euro found strength in the previous session boosted by news that the EU regulators had approved the Johnson & Johnson single shot covid vaccine. The EU’s vaccine programme is looking much brighter than previously which is helping to under pin the common currency.
Today all eyes are on the European Central Bank which will give its monetary policy announcement. After a relatively exciting March meeting where the central bank said that it would front load asset purchases, this meeting is expected to be fairly muted in comparison.
There has been limited new news and the ECB has already said that it will look through any temporary rise in inflation. Therefore the meeting is expected to have a muted impact on the Euro.
The Euro is also trading down versus the US Dollar so there is little reason for the central bank to talk down the Euro as we saw in some meetings last year. Plenty of bad news has now been priced in for the common currency.