GBP/EUR approaches €1.17, vaccine exports in the spotlight

Philip McHugh March 26th 2021 - 2 minute read

The pound mounted a recovery on Thursday as GBP investors welcomed the decision by EU leaders to not place restrictions on vaccine exports.
 
Sterling appears to be consolidating these gains this morning, with GBP/EUR stable at €1.1691 and GBP/USD ticking up to at $1.3771. GBP/CAD is rangebound at C$1.7317, while GBP/AUD and GBP/NZD hold steady at AU$1.8080 and NZ$1.9740 respectively.
 
The publication of the latest US PCE price index could see the US dollar close the session on a high if inflation accelerated as expected last month.
 

What’s been happening?

 
The pound rallied yesterday following reports that EU leaders were unsure about supporting the European Commission’s proposals to restrict vaccine exports.
 
The news came as a major relief to GBP investors who had previously feared that the banning of vaccine exports could be a major setback to the UK’s rollout and even delay the government’s reopening plans.
 
Meanwhile, after initially falling victim to some profit taking, the US dollar registered some modest gains on Thursday on the back of upbeat US data.
 
USD investors welcomed the releases as they saw US GDP revised higher in the last quarter of 2020 and a surprisingly largely fall in initial jobless claims last week, with new claims falling to their lowest level since the start of the coronavirus pandemic.
 
At the same time, the euro was pressured by the strength of the US dollar as a result of the negative correlation in the pairing, with EUR investors also reluctant to make any aggressive bets ahead of the EU leaders summit on vaccines.

 

What’s coming up?

 
The UK’s latest retail sales figures kicked off today’s session.
 
The data showed a solid rebound in sales growth last month, following on from a collapse in sales in January as the national lockdown came into effect.
 
For EUR investors the focus this morning will be on the latest German IFO survey of business confidence, with the euro potentially stabilising if business sentiment improved in line with expectations this month.
 
Finally, the US dollar looks poised to rally later this afternoon with the publication of the latest PCE price index.
 
The Federal Reserve’s favoured measure of inflation is forecast to have risen again last month, solidifying expectations that domestic inflation will accelerate rapidly this year.
 

Written by
Philip McHugh

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