The Euro Pound (EUR/GBP) exchange rate is heading higher this morning as markets await the latest interest rate decision from the European Central Bank (ECB) later this afternoon.
At the time of writing the EUR/GBP exchange rate is trading at around 0.8653 as the UK government is expected to provide official vaccination passports as early as May.
Euro (EUR) Supported by ECB Monetary Policy Hopes
The Euro is being supported this morning as investors and markets await the most recent interest rate decision from the ECB, which is expected to remain at the record low of 0%.
Investors are focused on whether the bank takes a more hawkish tone surrounding the Eurozone’s economic recovery as the bloc ramps up its vaccine rollout, or a more dovish tone as cases surge in some parts of Europe.
It comes as Germany votes on a new amendment to impose curfews and lockdowns on Germany’s 16 federal states if the virus incidence exceeds 165 cases per 100,000 residents.
German Health Minister Jens Spahn spoke to legislators before the vote saying:
‘As hard as it is, as sick of it as we are, reducing contact helps. We are again seeing 5,000 COVID-19 intensive care patients and rising, with the age of the patients sinking. We want to avoid an overburdening of our health system, an overburdening that many of our neighbouring countries have experienced painfully.’
Pound (GBP) Weakens on Covid-19 Concerns
The Pound has weakened against the Euro this morning as Covid-19 concerns creep in over the Indian variant of the virus and a potential third wave hitting the UK in the summer.
At a press conference on Tuesday evening the Prime Minister Boris Johnson warned Britons that the threat of the virus hadn’t left.
More so Professor Finn, a member of the Joint Committee on Vaccination and Immunisation (JCVI), commented on the prospect of a third wave of coronavirus saying:
‘The models that we’ve seen on JCVI clearly point to a summer surge in cases as the lockdown is relaxed, because there are still many people in the adult population who’ve not been immunised and who will therefore start to transmit the infection between each other.’
The next stage in the lockdown roadmap easing in England on the 17th of May include the reopening of hospitality venues, such as pubs and restaurants inside as well as outdoors.
Euro Pound Exchange Rate Outlook: UK Retail Sales in Focus
For Pound investors the latest retail sales from the UK for March are expected to drive movement in the currency as they recover from a -3.4% fall and are expected to rise to 4% year-on-year.
More so tomorrow will see the release of the latest consumer confidence form the UK and preliminary PMI data for April which is expected to show a sustained growth in the UK’s economy.
For Euro traders, the Eurozone’s own flash PMI’s for April could add support to the currency as the bloc’s economy starts to recover from the coronavirus pandemic.