The Pound to Euro (GBP/EUR) exchange rate was buoyed this morning as comments from the Bank of England and the continuing vaccine rollout helped to improve sentiment towards the Sterling as investors look through to a reopening of the economy in March.
The pair is currently trading around €1.1233.
Euro (EUR) Exchange Rate Struggles as ECB Speech Falls Flat
The Euro (EUR) was on the back bench this morning as both the Pound (GBP) and US Dollar (USD) exchange rates rallied against the Eurozone currency.
A speech made this morning from the ECB’s President Christine Lagarde did little to help the Euro.
Speaking today, Lagarde was upbeat about the Eurozone economy and alluded that if lockdown restrictions are lifted at the end of March, the economy will rebound, she said:
‘I think our last projections in December are still very clearly plausible. Our forecast is predicated on lockdown measures until the end of the first quarter.’
However, with Germany expected to extend their lockdown until April, investors are increasingly worried for the single currency.
Pound (GBP) Exchange Rates Buoyed as Economic Reopening in Sight
The Pound (GBP) rallied this morning as comments made yesterday from BoE Governor, Andrew Bailey bolstered sentiment towards Sterling.
Bailey, confirming that interest rates would not be cut to below 0% on Tuesday said that there were ‘lots of issues’ with negative interest rates.
The Pound is expected to benefit further if markets continue to reduce any expectations for a negative interest rate cut.
Furthermore, the UK’s aim to vaccinate 15 million of those in the most vulnerable groups by mid-February continues to be watched by investors, so far over 2 million people in the UK have received their first vaccinations.
If the target is perceived to be successful, the economy is expected to slowly open back up, sparking joy for the GBP exchange rate.
Pound to Euro (GBP/EUR) Exchange Rate to be Supported by Vaccine Rollout
Pound (GBP) investors will continue to focus on both the Covid-19 vaccine rollout and lockdown restrictions.
With UK Home Secretary Priti Patel saying that restrictions were already ‘tough enough’ it’s hoped that the Sterling will be supported as the vaccine rollout continues.
For Euro (EUR) investors any negative Covid-19 headlines, such as lockdowns being extended will continue to put pressure on the exchange rates.
Even more so, with any further signs that cases are still rising and vaccinations begin to slow, concerns will grow over the Eurozone’s economic recovery in the first quarter.
In Eurozone economic news, tomorrow will see the publication of Germany’s Real GDP Growth Data.
The accompanying Budget is likely to outline the government’s spending plans and could have a greater bearing on the Euro.