GBP/EUR Exchange Rate Edges Higher as UK Business Confidence Soars
The Pound to Euro (GBP/EUR) exchange rate rose today following news that UK business confidence had soared to a 12-month high. The pairing is currently fluctuating around €1.16.
The BDO’s Services Optimism Index rose from January’s 86.60 to 94.13 in February, towards the long-term average of 100.
Kaley Crossthwaite, Partner at BDO LLP, commented:
‘The speed of the vaccine rollout across the UK has given businesses a much-needed shot of relief.’
Meanwhile, bookings have surged for the long-awaited ‘end of Covid’ as consumers organises celebrations such as weddings after Prime Minister Boris Johnson announced a ‘cautious but irreversible’ roadmap out of lockdown restrictions.
Mark Sweney, a media business correspondent at The Guardian, commented:
‘The UK is in store for an unprecedented boom in events as the industry prepares to stage hundreds of thousands of weddings and “end of Covid” celebrations when restrictions on gatherings are lifted this summer – just expect to pay 25% more than before the pandemic.’
As a result, the GBP/EUR exchange rate rose today on renewed confidence in the outlook for the UK’s economy in the months ahead.
In UK coronavirus news, today saw daily deaths fall to 82, that’s -62 against last week. Daily cases are also down at 5,177, down by -858 compared to the previous week.
Consequently, Pound traders are becoming more confident that the UK’s Covid-19 vaccine is proving a success, with numbers continue to drop and promising a relatively seamless transition into easing lockdown measures.
Euro (EUR) Sinks as German Industrial Data Falls Below Forecasts
The Euro (EUR) fell against the Pound today following this morning’s release of Germany’s Industrial Production data for January. The figure fell below forecasts by -2.5%.
As a result, this has sparked concerns over the German economy, which is the largest within the Eurozone.
Andrew Kenningham, chief Europe economist at Capital Economics, highlighted Germany’s extended lockdown restrictions as limiting the nation’s economic growth:
‘Nonetheless, the poor January number is another reason to think that aggregate GDP will contract, perhaps quite sharply, in Q1.
‘With Covid-19 restrictions having been extended until the end of March, and potentially running for longer, overall economic activity will remain subdued for some time. There should be a sustained recovery from the second quarter, however, provided that the vaccination programme gathers pace.’
Today also saw the release of March’s Eurozone Sentix Investor Confidence data, which beat forecasts and rose to 5.
However, with Europe still lagging in its Covid-19 vaccine rollouts, EUR investors are becoming more cautious about the outlook for the Eurozone’s economy in the months ahead.
GBP/EUR Exchange Rate Outlook: Could an Improving Outlook for the UK Economy Bolster the Pound This Week?
Pound traders are awaiting tomorrow’s publication of February’s UK BRC Like-for-Like Retail Sales.
Any improvement in the outlook for the UK economy, however, would further drive-up the GBP/EUR exchange rate.
Euro (EUR) investors will be eyeing tomorrow’s release of the Eurozone’s GDP figure for the fourth quarter.
If this points to a significant downturn in the bloc’s economy, then the EUR/GBP exchange rate will suffer.
The GBP/EUR exchange rate could head higher this week as the UK’s Covid-19 cases continue to fall. As a result, Sterling will likely benefit from renewed confidence in the nation’s progress towards economic recovery.
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