EU at ‘crunch point’ over future of the Eurozone says expert
Jeremy Thomson-Cook, Chief Economist at international business payments specialist Equals Money, was speaking at a time when countries throughout the EU27 – as the 19 states which are also members of the eurozone – are struggling to contain a third wave of COVID-19. Their progress has been hampered by the bloc’s sluggish vaccine rollout, which has seen 16.54 doses administered per EU citizen as of yesterday – less than one-third of the UK’s total, 51.58.
Mr Thomson-Cook said: “The euro is not a particularly well-loved currency at the moment. Investors have started to shun the single currency based on its economic or healthcare response to the pandemic, which is sadly lagging well-behind those in the UK and US.
“Until there is further clarity on either economic stimulus or a vaccine program that is fit for purpose, those in currency markets will happily put their money elsewhere.”
He added: “With a new four-week lockdown hitting France from Saturday there is little wonder that the euro cannot find a bid at the moment.
French President Emmanuel Macron is under pressure as a result of the situation
The euro is not popular at the moment, said Mr Thomson-Cook
“The decision by the Macron government to essentially shutting the country for a month – including schools going into the Easter holidays – has highlighted the disparity in progress against the virus between France and the US/UK.
“Inflation data yesterday also failed to haul the euro higher; without data or vaccine support there is little reason to hold the single currency if you don’t need to.”
By contrast, he added: “The key for sterling’s strength in Q1 was the vaccination program and the timetable for reopening.
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Boris Johnson, the UK’s Prime Minister
“It will be the same in Q2 and any delays to the program of opening pubs, bars, restaurants, and shopping centres will be a blow to the market’s confidence in sterling.
“Updates from the government are due on April 5, May 10, and June 14 ahead of changes a week later from those dates.”
Sterling gained about 4.8 percent versus the euro in the first quarter of the year, which analysts attributed mostly to the UK’s rapid vaccine rollout – one of the fastest in the world – as well as relief at the start of the year that a no-deal Brexit had been avoided.
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Emmanuel Macron confirmed the lockdown in a televised address yesterday
Parisians enjoy the weather prior to Mr Macron’s announcement
Euro-sterling’s downward trajectory stalled a little today after it came close to, but did not breach, the key 0.85 value in the previous session.
Lee Hardman, currency analyst at MUFG, said: “There’s maybe some initial disappointment that we haven’t broken those key levels.
“But generally the fundamental economic data from the UK is still coming in on the strong side of expectations.
Coronavirus vaccination rates compared
“We’re pencilling in the outperformance continuing through the next quarter.”
Stuart Cole, chief macro strategist at Equiti Capital in London, added: “If things carry on the way they are now, I think we could see EURGBP trading around 83p by the end of the year.”
A revised manufacturing survey showed that British factories rode a wave of orders in March and prepared for a gradual reopening of the economy from COVID-19 shutdowns by hiring staff at the fastest rate since 2014.
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As of 11.08 GMT, the pound was flat against the dollar at $1.3776.
Versus the euro, it was down around 0.1 percent at 85.2p per euro.
UBS said in a note that it favours sterling versus the dollar, and had raised its forecast for sterling-dollar to $1.49 by the end of the year, from $1.46.
Lockdown restrictions are gradually being lifted in England, with more substantial changes, including the re-opening of non-essential retail and outdoor hospitality settings, due on April 12.