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Euro Struggles Despite 'Light at the End of the Tunnel' for Eurozone Economy

Published: 17 Feb at 2 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound (GBP)

The Pound continued to rise today owing to growing confidence in the UK’s Covid-19 vaccination programme. Last week saw the UK hit a 15-million milestone in vaccinations, buoying the outlook for the nation’s economy as Downing Street considers the next steps towards easing lockdowns.

Prime Minister Boris Johnson however commented that lockdown would be eased in stages, with great caution and with a view to being irreversible.

Covid-19 case rates have also dropped to their lowest levels since early autumn 2020 in the four UK nations.

Consequently, GBP investors are becoming more confident about the outlook for the nation’s economy.

Euro (EUR)

The Euro continued to struggle this week, despite signs that the Eurozone’s economy could be on the road to recovery. This follows Tuesday’s publication of the latest Eurozone GDP data, which beat forecasts in the fourth quarter but remained subdued at 0.6% quarter-on-quarter.

European Commissioner for the Economy Paolo Gentiloni was upbeat, commenting:

‘There is, at last, light at the end of the tunnel. As increasing numbers are vaccinated over the coming months, an easing of containment measures should allow for a strengthening rebound over the spring and summer. The EU economy should return to pre-pandemic GDP levels in 2022, earlier than previously expected.’

However, the European Union’s (EU) relatively slow Covid-19 vaccine rollout is sparking concern that the nation’s economic recovery could lag the rest of the world.

US Dollar (USD)

The US Dollar struggled this week as improving market mood and surging equity markets has limited the appeal for the safe-haven currency.

However, USD has benefited from today’s publication of the latest US Retail Sales data for January, which beat forecasts and rose by 5.3%.

Analysts at Reuters commented on the data:

‘U.S. retail sales rebounded sharply in January after households received additional pandemic relief money from the government, suggesting a pick-up in economic activity after being restrained by a fresh wave of COVID-19 infections late last year.’

Canadian Dollar (CAD)

The Canadian Dollar has begun to struggle after WTI oil prices fell back below $60 per barrel.

As a result, the oil-sensitive ‘Loonie’ suffered as the outlook for Canada’s economy has deteriorated on volatile oil prices.

Instead, CAD traders will be eyeing today’s latest CPI data for further insights into the direction of the nation’s economy.

Australian Dollar (AUD)

The Australian Dollar is subdued after the Reserve Bank of Australia’s (RBA) Assistant Governor Christopher Kent hinted at taking further measures to strengthen the economy and temper the strength of the ‘Aussie’.

New Zealand Dollar (NZD)

The New Zealand Dollar has also struggled today owing largely to returning strength to the US Dollar. Consequently, this has limited gains for the high-yield NZD.

As of Wednesday, 17th February 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1511, GBP USD exchange rate was 1.3866, GBP AUD exchange rate was 1.7872, GBP NZD exchange rate was 1.9276, and GBP CAD exchange rate was 1.761.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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