GBP/EUR: Euro Rallies vs. Pound As Italy Seeks To Avoid Debt Crisis

Stock advanced in the Asian session as  Covid-19 vaccine rollout optimism fuelled global growth bets.
Tighter lockdown restrictions in several European countries could limit the Euro’s ascent against safe haven counterparts.
Forecast beating inflation and PMI figures could boost the Euro versus the USD and JPY.

Equity markets advanced in the Asian session as investors cheered the  rollout of several covid vaccines and bet on a return to economic normality in 2021.

In FX markets, the risk sensitive Norwegian Krone outperformed alongside the Euro. The safe haven US Dollar continued to trend lower. Looking ahead, Eurozone and US PMI figures headline the economic calendar.

Tighter Lockdown Restrictions Could Limit Euro’s Upside

In 2020, the Euro rallied 3.4% and 8.8% respectively against safe haven counterparts the Japanese Yen and US Dollar. These gains could continue into the first quarter of 2021 amid bullish technical setups.

However, rising covid cases and tighter lockdown restrictions in several European nations could cap near term gains. Germany’s lockdown, which started in December could be extended as deaths remain elevated..

The slow rollout of the vaccine could also hamper the region’s economic recovery.

Even so, investors could shrug off these concerns and  turn their attention to Eurozone PMI and inflation releases coming out  this week. Stronger than forecast figures could ease the need for further monetary easing from the European Central Bank and underpin the Euro versus the USD and the Yen.