The Pound to Euro (GBP/EUR) exchange rate is trading higher this morning, recovering from lows seen last week.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1077.
Pound (GBP) Softened by Gloomy Economic Outlook amid Lockdown
The Pound (GBP) found small gains against the Euro (EUR) as the impacts of the third national lockdown across the UK concern investors.
As Covid-19 cases in England rose by almost a 25% over the Christmas period, according to the latest Test and Trace data, the economic recovery from coronavirus looks to be a way off, as another contraction in growth in the first quarter of 2021 is expected.
However, it is hoped that more than 700 sites will be delivering vaccines by the end of the week.
Although, vaccines minister Nadhim Zahawi admitted the target of vaccinating around 14 million people in the highest priority groups by February 15 – the date that the national lockdown is hoped to be eased – was “stretching”.
With the UK’s economic recovery under threat, there is speculation that the Bank of England (BoE) will also be forced to ease its monetary policy again, something which is further limiting the appeal of the Pound this morning.
Euro (EUR) Falls on Disappointing Retail Sales Figures
The Euro (EUR) struggled to find any gains this morning as disappointing data releases from the Eurozone did nothing to help the currency.
According to data from IHS Markit, the Eurozone Construction PMI edged down to 45.5 in December from 45.6 in the previous month. This was below expectations and extended the current sequence of decline to ten months.
Furthermore, the publication of retail sales figures from the Eurozone, showed that sales collapsed to -6.1% in November, its worst levels since the height of the first wave of the coronavirus pandemic back in April.
Even more so, Eurozone inflation remained negative, the latest official data showed Thursday, an inflation reading of -0.3 percent was recorded the same level as in November.
The Euro also struggled against the US Dollar (USD) as the Greenback bounced back from civil unrest in Washington DC, and President elect Joe Biden was officially certified to become the next US President on January 20th.
GBP/EUR Exchange Rate Forecast: Pound to Struggle on Lockdown Uncertainty
Looking ahead, Pound (GBP) investors of course will continue to keep an eye on any coronavirus lockdown concerns or uncertainty as worries that the vaccine rollout will not be implemented as quickly as needed.
For Euro (EUR) traders, the main focus at the end of the week will be the publication of Germany’s industrial production figures.
This coupled with unemployment rate figures also due to be released tomorrow could drive down the Euro further, though further disappointing data could prove GBP-positive.