The EUR to GBP exchange rate was 0.22% higher in early trading on Friday after data showed a drop in UK retail sales and a higher German PMI release. The pair will see small movement into the weekend until the reopening of Britain’s economy is clearer.
EURGBP trades at 0.8670 after a push below the April 2020 lows of 0.8685 this week.
The latest UK retail sales numbers saw a slump to -5.9% for January after expectations of a smaller loss of -1.3%. The country’s third lockdown is having a big effect on official figures. Government borrowing was less than expected, but the figure was still the highest in January since records began. It was also the first January deficit in 10 years.
The post-Christmas slump in the economy, combined with a lockdown saw clothing sales down 35% from December, while household goods dropped 20%.
The market is now awaiting PMI data from the Eurozone and the UK, but Germany saw strong figures for its manufacturing sector. Forecasts of 56.5 were beaten with a 60.6 print, which boosted the economy after a dip in services PMI.
The next PMIs will define the path for the EURGBP rate into the weekend and attention will turn to the Prime Minister’s plans to reopen the economy on Monday. A “staged” opening has also been suggested by Boris Johnson, with a data-driven approach, so the reopening will look much like previous ones with hospitality opening last- maybe in May.
UK Has ‘1m Jobs at Risk’ if Boris Doesn’t Give Dates
Trade body UK Hospitality has criticized Boris Johnson’s “data, not dates” approach to reopening as it emerged 1m jobs could be at risk with such an approach.
The group’s chief executive, Kate Nicholls, said that pub chains and restaurants were “hamstrung” by a lack of clarity from the government about financial support and opening dates.
Institute for Government thinktank has also pleaded for more than buzzwords and catchy slogans from the PM, saying,
“The government has a chance to build on the success of its vaccine programme… But it needs to reassure the public that it won’t repeat the problems that have dogged its strategies in the past. A successful lockdown lifting is not just about producing a ‘roadmap’; it is about how you safely navigate the journey”.
The thinktank also said as many as 1 million of the sector’s 3.2 million jobs could be at risk, while more would be in danger in the supply chain, which includes food and drink suppliers and laundries.
The EURGBP pair has slumped in 2021 as sterling gained on the government’s vaccination strategy, but the cracks are emerging from the recent lockdowns and the government needs to handle the reopening well. Get in touch to discuss these factors in further detail to see how your upcoming currency exchange is likely to be impacted.