The Euro Pound (EUR/GBP) exchange rate has been mixed for much of the day as the latest German Ifo business climate missed forecasts.
At the time of writing the GBP/EUR pairing are trading at around £1.1487 as a lack of any notable data from the UK limits Sterling.
Euro (EUR) Mixed on German Ifo Business Climate
The Euro has seen mixed movement against the Pound today as the release of the latest German Ifo business climate did little to support the single currency.
According to the Ifo institutes latest business climate index, economic optimism in Germany is being pulled back by a recent increase in coronavirus cases, and the global shortages of key parts and components such as semiconductors.
Ifo economist Klaus Wohlrabe commented on the latest index to Reuters saying that a range of product shortages are causing the index to remain below forecasts:
‘There are bottlenecks with semiconductors, for example, but also with many other products. There is sand in the engine when it comes to procurement, across almost all industries.’
The Euro has found support from the US Dollar’s weakness today as a pullback in the currency allows EUR to head higher as investors worry that the Federal Reserve will remain dovish in the coming months.
Pound (GBP) Limited by Lack of Notable Data
The Pound has been unable to find any significant gains against the Euro today as a lack of notable data limits Sterling.
Despite an expected rapid recovery from coronavirus in the UK, the Pound remains mixed against many of its major rivals.
However the recent announcement that those age 44 will be invited for their coronavirus vaccine jab this week has caused investors to remain optimistic surrounding England’s lockdown easing roadmap.
Jeremy Thomson-Cook, chief economist at international business payments firm Equals Money comments that the Pound could head higher if the UK’s vaccination programme remains on target:
‘The dichotomy of rising Covid-19 cases globally but a UK that is enjoying reopened bars, restaurants and shops should continue to work in the pound’s favour should the vaccination program continue to progress, the hospitalisation rate remain low and border controls stay in place to eliminate the risk of further outbreaks.’
Euro Pound Exchange Rate Outlook: German Consumer Confidence in Focus
For Euro traders, Wednesday will see the release of the latest German GfK consumer confidence index for May which is expected to have risen to -3.8 points, although the figure remains in contraction it would be the highest level in 6 months.
In absence of any notable data the Pound will continue to be driven by any further coronavirus developments, investors will keep a cautious eye on the Indian variant of the virus and whether an influx of cases could derail England’s lockdown easing roadmap.