The EURGBP rate has dropped on Monday and looks to have surrendered its chance of getting above the 0.8700 level. Stronger German retail sales and PMI data form Europe couldn’t boost the currency pair and we will now await the PMI numbers from the UK, before the BoE meets on Thursday.
EUR to GBP is 0.07% lower on Tuesday at a price of 0.8663.
UK ‘question mark’ on travel
An EU official has questioned the ability for the UK to be on a safe list for European travel. The European Commission said it was proposing an easing of travel for those who are “coming from countries with a good epidemiological situation,” as well as those who have received “the last recommended dose of an EU-authorised vaccine”. It still remains “question mark” whether the UK will be on that list despite the country’s success, but any move would likely be meant to dent the UK’s tourism sector. The UK saw only one fatality attributed to the coronavirus on Monday.
The EURGBP has one eye on Thursday’s Scottish elections and an SNP win is obvious, but the level of the vote will be key. Nicola Sturgeon has distanced herself recently with claims that “steamrolling” another referendum would not be the best plan, but any SNP win would likely spur calls for another independence vote. The other key issue is who will come second as the Tories nudged Labour out of the second spot, but the party’s new leader Douglas Ross has not had a great campaign and may suffer from a socialist drive.
European data fails to spur currency gains
German retail sales jumped to 11% in March, for their largest yearly increase since the pandemic began as restrictions were finally eased in Europe’s largest economy.
Data from the Eurozone also saw PMI data coming in strongly for the Italian and German economies. The UK will see the same numbers released today and that should see a similar result, although supply chain shortages hit China and that could have an effect. The pound may add to yesterday’s gains but traders will be cautious of getting ahead of the Bank of England’s interest rate and monetary policy decision on Thursday.
The bank will keep rates lodged at 0.1% but markets are keen to know how, and when, they will wind down the bond buying program as the UK economy produces some of the best growth figures in the G7 countries.
The EURGBP will now look to test the lower levels after a rally from below the 0.8500 level a few weeks ago. The pair still trades at a discount from the pre-referendum prices but the UK still has some political risk with the recent flare up in Northern Ireland and another Scottish election, which could see calls for another Scottish independence vote.