The Euro to Pound exchange rate struggled this morning, as disappointing data releases and vaccine rows plague the Eurozone.
The pair is currently trading at around 0.8806.
German Retail Sales Slump Pushes Down Euro (EUR)
Worries over the Eurozone’s largest economy Germany were elevated this morning as retail sales figures soured the mood over the single currency.
German retail sales plummeted to -9.6% which was much worse than forecasts of a 2.6% drop. The decline can be explained by worsening coronavirus infections in the country leading to increased restrictions and lockdown measures.
The Euro found little relief from various Markit Manufacturing PMI’s released across the bloc this morning.
The IHS Markit Eurozone Manufacturing PMI was revised slightly higher to 54.8 in January of 2021 from a preliminary of 54.7 but below 55.2 in December.
Eurozone unemployment figures from December released this morning showed no change in the rate and were in line with market expectations, doing little to support the Euro.
The Eurozone also struggles against its coronavirus situation as the AstraZeneca row continues and fears that a delay in receiving vaccines is keeping investors jittery.
Pound (GBP) Climbs Higher as Manufacturing PMI Beats Forecasts
The Pound was pushed higher this morning as the UK’s Markit Manufacturing PMI beat forecasts.
Although the manufacturing sector slowed at the start of 2021 and fell to a three month low of 54.1, the sector remains in growth territory.
Rob Dobson, Director at IHS Markit commented on the data, saying:
‘The hope is that the current constraints will start to ease once COVID-19 restrictions are lifted, vaccines are rolled out and ports, suppliers and manufacturers adapt to the new trading environment post-Brexit. If so, supply, demand and production bottlenecks should slowly work through the system and growth will not be knocked too far off course through 2021.’
The Pound finds itself supported by its successful vaccine rollout, with the care home vaccine target hit, according to NHS England.
Prime Minister, Boris Johnson commented on the ‘milestone’ saying:
‘Today marks a crucial milestone in our ongoing race to vaccinate the most vulnerable against this deadly disease. We said we would prioritise and protect care home residents, and that is exactly what we have done.’
EUR/GBP Outlook: AstraZeneca Vaccine Row Could Cause Volatility in Pairing
Coronavirus developments will remain in focus for both Euro and Pound investors.
If the ongoing row between the EU and AstraZeneca is not rectified, volatility between the pairing could further EUR losses.
Also in focus for Euro investors will be the publication of the Eurozone’s latest GDP figures.
The figures are expected to show a contraction, which is expected, and will likely indicate a double-dip recession and could weigh on the Euro.
For Pound investors, coronavirus developments will centre on the continuing vaccine rollout across the UK, and any indication that restrictions could be eased at the start of March proving positive for GBP.
GBP investors will also keep an eye on the Bank of England’s (BoE) interest rate decision for February, although no changes are expected the Pound could be affected by Governor Andrew Bailey’s comments on the UK economy. With any opposition to negative interest rates being positive for the Pound.