The Euro to Pound exchange rate was rangebound this morning as Germany’s industrial production for December was flat.
At the time of writing the pair is trading at around £0.8771.
Euro (EUR) Muted as German Industrial Output Stalls
The Euro found little movement this morning as the Eurozone’s largest economy, Germany, found its industrial production for the end of 2020 stalling.
Industrial production in Germany stalled in December of 2020, compared to market forecasts of a 0.3 percent increase, amid new coronavirus lockdowns in Germany and other European countries.
The Eurozone continues to struggle against the coronavirus pandemic and its delayed vaccine rollout, with some EU states only just receiving their first doses of the AstraZeneca vaccine.
Furthermore, comments from French President Emmanuel Macron at the end of January that the AstraZeneca vaccine appeared ‘almost ineffective for those over 65’ has caused many in the country to turn away from being vaccinated against the virus.
President Macron has previously said that all those who wish to be vaccinated in France will be by the end of summer 2021.
With only about 2 million of the 67 million people living in France receiving their first vaccination so far, investors remain jittery over the state of the Eurozone’s hold on the pandemic.
Pound (GBP) Supported by Vaccine Rollout
The Pound continues to find support in the successful vaccine rollout across the UK with over 12 million people now having received the first of their jabs.
Although, this morning reports have come from South Africa that the Oxford AstraZeneca may not protect as well against the South African variant of the virus, and thus the country have stopped their rollout of the vaccine for the time being.
However, Health minister Edward Argar sought to reassure those who have had the AstraZeneca vaccine in the UK saying:
‘The dominant strains in this country are not the South African strain – they are the historic one and the Kent one. [There is] no evidence that this vaccine is ineffective in preventing hospitalisation and death.’
In response to these reports, AstraZeneca released a statement saying:
‘Oxford University and AstraZeneca have started adapting the vaccine against this variant and will advance rapidly through clinical development so that it is ready for autumn delivery should it be needed.’
EUR/GBP Outlook: ECB Speech in Focus
For Euro investors, this afternoon will see a speech from European Central Bank (ECB) President Christine Lagarde.
Any dovish comments surrounding the Eurozone’s economy or response to the coronavirus pandemic would prove negative for EUR.
Euro traders will also keep an eye on German inflation rate data released on Wednesday which is expected to show a rise in consumer prices for the first time in seven months, which could bolster the Euro.
For Pound investors, the end of the week will show GDP data for the UK which is forecast to show just a 0.5 growth for the fourth quarter of 2020, as coronavirus restrictions limit growth. The EUR/GBP exchange rate will continue to be driven by any further coronavirus developments, with the continued success of the UK vaccine rollout pushing Sterling higher.
