- Pound (GBP) supported after upbeat BoE
- UK GDP is the key release this week, on Wednesday
- Euro (EUR) rallied on USD weakness & upbeat data last week
- German ZEW sentiment data due tomorrow
The Pound Euro (GBP/EUR) exchange rate is bounding higher at the start of the new week. The pair made neither gains nor losses across the previous week, closing on Friday at €1.1485, approximately the same level that it started the previous week at. At 05:45 UTC, GBP/EUR trades up 0.46% at €1.1544.
The Pound was well supported across the previous week following the BoE monetary policy decision. The UK central bank slowed the weekly pace of gilt purchases but insisted that this was not a move towards a less dovish monetary policy.
The BoE also upwardly revised the UK economic growth outlook. The central bank now expects the UK economy to expand 7.25% this year thanks to the quick vaccine rollout, extended furlough scheme and the economic reopening.
Moreover, covid numbers remain encouraging as infections continue to fall.
Looking ahead the key release for the Pound this week will be the UKGDP reading for the first three months of the year. Analysts are expecting to see a -1.4% contraction in Q1. This would be significantly better than the 4% contraction initially forecast by the UK central bank.
Meanwhile the Euro received a boost last week from the weaker US Dollar. The greenback sunk following a huge miss in the US non-farm payroll report.
Meanwhile European data was upbeat. Eurozone retail sales and PMI data charges past expectations, as did German factory orders despite the ongoing covid restrictions. The data suggests that the Eurozone economy has turned a corner.
The covid picture in the bloc is also starting to improve. Spain lifted a six-month state of emergency and national curfew over the weekend after covid cases fell. The country has so far not made it onto the UK greenlist for travel but hopes remain that this will change in June.
Looking ahead, there is no high impacting Eurozone data due to be released today. The latest ZEW German sentiment data will be in focus tomorrow.