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Pound Euro Exchange Rate News: GBP/EUR Trades at 22-Month High amid UK Economic Optimism

December 31, 2021 - Written by John Cameron

GBP/EUR Mixed as Omicron Case Numbers Increase

The Pound to Euro (GBP/EUR) exchange rate is muted in the beginning of today’s session, buoyed by new optimism from GBP investors despite increasing case numbers of Omicron.

At the time of writing, the GBP/EUR exchange rate is trading at approximately €1.1924, with minimal market movement.

Pound (GBP) Firms amid Investor Optimism

The Pound (GBP) is steady against the Euro (EUR) this morning as investors are increasingly hopeful that the UK economy will not be derailed by the latest strain of coronavirus, Omicron.

Scientific research has shown that Omicron is less likely to lead to hospitalisations than the previous strain, Delta.

This has been reiterated by the New Year speech delivered by the UK Prime Minister, Boris Johnson.

Johnson has said that Britain is in a ‘comparably better’ situation than this time last year due to the high number of people getting vaccinated and has appealed to the currently unvaccinated individuals to ‘get that jab, and do something that will make 2022 a happy new year for us all.’

Johnson claimed that every adult in England has now been offered a boost jab.

Moreover, Johnson highlighted the £30 billion invested into UK hi-tech industry throughout 2021 – twice the amount of Europe’s largest economy, Germany.

However, The Liberal Democrat leader, Ed Davey, has stressed the current ‘cost of living crisis’ which is likely to be a major concern for the beginning of 2022, capping Sterling’s potential as we head into the new year.

Additionally, on Thursday, UK data showed that coronavirus cases hit a new record high, exceeding 189,000, which is further dampening GBP’s potential.

Euro (EUR) Directionless amid High Coronavirus Cases

Meanwhile, the Euro is trading in a narrow range against the Pound this morning due to change in many European countries’ coronavirus policies despite high numbers of cases.

Spain and Portugal have announced that they will be easing the quarantine period from 10 days to 7, and Italy will be revoking the need for newly-vaccinated individuals to self-isolate should they come into contact with a person who has been tested positive for Covid-19.

However, many health officials are asking that these policies are reconsidered, arguing that the highly-contagious Omicron could stall Europe’s economy.

Moreover, in Eastern-Europe, coronavirus deaths have surpassed 1 million, which is heightening concern than the healthcare systems in these countries are not able to handle the rise in cases.

This is limiting the single currency’s appeal and leaving it subdued in year-end trade.

GBP/EUR Exchange Rate Forecast: GBP and EUR to be Steered by Coronavirus Decisions

Looking ahead, the Pound Euro exchange rate is likely to remain vulnerable to market movements and coronavirus advancements due to an absence of data scheduled to be released during today’s session.

As many markets will close over the bank holiday, GBP and EUR are susceptible to government decisions surrounding coronavirus policies.

If the UK government reinstates restrictions in the new year in a bid to curve the rising number of case numbers, it’s likely that GBP will soften.

However, if the UK government continues to resist calls to tighten restrictions, it may keep Sterling buoyed.

The Euro will also be subject to coronavirus reports, and the announcements of both European leaders and health officials.

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