The Euro to Pound exchange rate fell this morning as the preliminary Eurozone GDP data disappoints.
At the time of writing the pair is currently trading at around 0.8816.
Euro (EUR) Falls as Preliminary Eurozone GDP Shows Contraction
The Euro struggled this morning as the preliminary fourth quarter GDP data for the Eurozone showed a contraction of -0.7%, though still managing to beat forecast of -1.0%.
The data shows that the Eurozone’s GDP fell shrank 6.8% in 2020 can be attributed to the coronavirus pandemic and lockdown restrictions imposed across the bloc.
The Euro also struggles as a result of Chancellor Angela Merkel’s decision to extend Germany’s current restrictions until at least mid-February, though reports suggest the lockdown could last way into March.
With the Eurozone continuing to be thrashed by the second wave of the pandemic, investors remain jittery over the state of the bloc’s economic recovery.
South African Variant of Coronavirus Doesn’t Limit Pound (GBP) Movement
The Pound pushed higher this morning despite the more deadly South African variant of the coronavirus being detected in eight different postcodes across the country.
As a result of this, surge testing is to be introduced to help combat the spread of the variant, with 80,000 people to be tested door-to-door.
Professor Calum Semple, a member of the Scientific Advisory Group for Emergencies (Sage), spoke on the new variant this morning saying:
‘We don’t want a virus like this spreading throughout our community and taking advantage of the lack of immunity that we currently have.’
Today, Nicola Sturgeon is expected to give an update on Scotland’s coronavirus situation with the outcome of a review on lockdown restrictions.
Parents across Scotland will find out if their children will be able to return to school in the middle of February, though Ms Sturgeon is expected to announce an extension of all restrictions currently imposed across the nation, which could add pressure to the Pound.
Euro to Pound Outlook: Eurozone Services PMI’s in Focus
Euro investors will be looking towards tomorrow’s services PMI data releases across the Eurozone bloc.
The figures will give an indication of the state of the Eurozone’s economic start to 2021, though figures are expected to remain in contraction, which could add pressure to the Euro.
Eurozone inflation will also be eyed by investors tomorrow, which is forecast to rise to 0.3%.
Pound investors will also be focused on their own Markit Services PMI release for January which is forecast to fall to 38.8, a contraction which although expected due to the UK’s lockdown restrictions could cause trouble for Sterling.
Any coronavirus developments will also impact EUR/GBP movement in the coming days, and weeks.
News that vaccine rollouts are delayed or further lockdowns are imposed could cause volatility between the pair.
