The EUR to GBP exchange rate was trading higher at the start of the week as the euro takes advantage of the UK’s virus issues. Britain saw a fourth-straight day of cases of over 1,000 as the country targets mass vaccinations to stop the rot.
The Eurozone countries are seeing their own struggles with France and Italy being at the forefront, but the pound is still under pressure.
Euro versus sterling was up 0.30% at 0.9034 on Monday with Gross Domestic Product (GDP) coming on Friday for the UK economy.
Monetary Policy and GDP Will Feature Later in the Week
The data is light at the beginning of the week for the EUR to GBP but Thursday will bring European monetary policy meeting minutes. The minutes may give some insight into the path for the European Central Bank in 2021 and last week’s inflation numbers will increase the chance of some policy action in the new year, which may involve negative interest rates.
The Bank of England had planned negative interest rates in the event of a No Deal Brexit, but that ship has sailed and the pair could see volatility this year as the UK and EU adapt to the new trading environment.
Friday will see an update for UK GDP but this is not the official number and any positive change will be overshadowed by the ongoing virus problems in the UK. The British economy looked to be turning a corner after the summer, but the second lockdown push has put paid to that.
UK and Europe Both Weighed Down by Virus
The UK and Europe are still struggling to contain the coronavirus with another 1,000 deaths in the UK ‘within 28 days of a positive test’. In France the number of cases was around 15,000 on Sunday with 15,000 with 18,000 new cases in Italy.
The UK number marked a fourth day of fatalities above 1,000 and the government is pinning its hopes on the vaccination with seven mass testing centres opening in the country this week. The centres will offer vaccines to the over 80 age group, alongside front-line workers, as the country seeks to escape from the clutches of the virus.
Health Secretary Matt Hancock said they were “on track” to reach the target of vaccinating 15 million people by the middle of February. This could help to loosen the lockdown restrictions for the second quarter and the government hopes to offer every adult a vaccine by the Autumn.
Europe is lagging behind the UK in vaccinations and this could see a switch in euro strength against the pound as the year continues. If you’d like to discuss these factors in further detail get in touch using the form below.