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GBP/EUR slips as EU-AstraZeneca row raises vaccine supply concerns

currency-newsGBP/EUR slips as EU-AstraZeneca row raises vaccine supply concerns
The pound struggled to find support at the end of last week amidst concerns that potential supply issues could derail the UK’s successful vaccination programme.
However, Sterling opens this week on the front foot, with GBP/EUR jumping to €1.1332 and GBP/USD ticking up to $1.3741. GBP/CAD is buoyed at C$1.7549, while GBP/AUD and GBP/NZD have accelerated to AU$1.7960 and NZ$1.9111, respectively.
Coming up, will we see strong US PMI figures help to cheer market sentiment at the expense of the US dollar today?

What’s been happening?

The pound was left mostly directionless through the end of last week’s session amidst concerns over the escalating row between the EU and UK vaccine producer AstraZeneca.
As the EU kept up pressure on AstraZeneca to ‘deliver on its commitments’, it pushed for the company to divert vaccines from the UK to the continent, stoking concerns about the possible impact this could have on the UK’s vaccination rollout.
The euro, meanwhile, firmed on Friday following the publication of Germany’s latest GDP figures.
The preliminary Q4 growth figures revealed Germany’s economy expanded by 0.1% at the end of 2020, printing above expectations that growth would remain flat at 0%, and likely indicating Europe’s largest economy has avoided a double-dip recession this winter.
At the same time, after initially rallying as investor caution in the stock market permeated through the currency market, the US dollar found itself relinquishing ground as the announcement of successful trials for two more coronavirus vaccines helped to bolster the mood.

What’s coming up?

Kicking off this week’s session we had the publication of Germany’s retail sales figures, which looks to put some pressure on the euro this morning after reporting sales growth slowed sharply in December due to the country’s lockdown measures.
Also set to influence EUR exchange rates this morning will be the publication of the Eurozone’s latest jobs data, where another bump in unemployment may add to the pressure on the single currency.
Today’s data calendar also includes last month’s US ISM manufacturing PMI. Economists are forecasting another robust expansion of the US factory sector in January, which if correct could boost market sentiment at the expense of the US dollar.
Meanwhile, GBP investors will be keeping an eye on UK coronavirus developments as a steady fall in new infections and the continued success in the country’s vaccination programme may still offer potential for the government to ease lockdown measures later this month.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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