The EURGBP exchange rate is starting the week under the 0.8400 level after the pound sterling strengthened on economic data last week. Europe is caught up in another virus wave which is threatening lockdown in the bloc’s largest economies. The pound has seen further rate hike expectations with the Bank of England expected to increase borrowing costs at their next meeting in December.
The EUR to GBP rate trades at the 0.8370 level with 2020 lows closer to 0.8300.
Germany and Austria start the ball rolling for mandatory vaccines
Europe’s largest economy, Germany, is about to slam the brakes on the country’s stuttering economic rebound with another lockdown.
The country will also introduce mandatory coronavirus with ministers and scientists saying a move to make jabs mandatory was “unavoidable” as the country grapples with a fourth coronavirus wave.
The move comes as Austria made vaccinations mandatory from February 1 and was about to plunge into a strict 20-day lockdown from Monday. Protests have been happening in Austria and there were also violent protests in The Netherlands as European countries try to tackle their recent virus surge.
“It is politically no longer justifiable that entire industries, retailers, restaurants, clubs, bars and the entire cinema, cultural and event scene live in a state of crisis prescribed by the state for 20 months and are faced with great existential fears, while others are concerned take the freedom not to vaccinate,” said a German politician.
“So far, historical measures and sums of money have been able to save many companies. That doesn’t work in the long run,” he added.
The country’s health minister Jens Spahn has also stated that an Austrian-style full lockdown is on the table.
He said: “We are now in a situation – even if this produces a news alert – where we can’t rule anything out. We are in a national emergency.”
The EUR v GBP will keep dropping if other European nations follow Austria and Germany.
December rate hike more likely according to BoE economist
The Bank of England’s chief economist, Huw Pill, has warned that the labour market improvements and rising inflation are likely to see a December interest rate hike from the bank.
Huw Pill said the “burden of proof” was now in favour of lifting rates from the current 0.10%.
Speaking at an economics conference in Bristol, the economist also said that he might vote for a larger increase than financial markets expected.
“That reflects a genuine uncertainty at a personal level; that I will want to see how I will assess the situation,” he said.
Pill said it had been a “pretty uncomfortable time” to join the central bank in September, with inflation already well above its 2% target.
“There’s no quick fix, and that lack of a quick fix means some patience will be required,” Pill said at the Economics Observatory and the Festival of Economics.
Euro Rate Forecast – Powered by Lumon