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Pound Euro Exchange Rate News: GBP/EUR Muted amid Anger Over Alleged Lockdown Party

January 12, 2022 - Written by John Cameron

GBP/EUR Directionless as No.10 Scrutinised over Lockdown Party

The Pound Euro (GBP/EUR) exchange rate is trading in a narrow range at the beginning of today’s session as the UK’s Prime Minister is suspected of being in breach of lockdown rules.

At the time of writing, the GBP/EUR exchange rate is trading at approximately €1.1995 with minimal market movement.

Pound (GBP) Muted as UK Prime Minister Questioned over Lockdown Misconduct

The Pound (GBP) is rangebound against the Euro (EUR) at the beginning of today’s session in response to Downing Street party headlines.

The UK Prime Minister, Boris Johnson, has come under scrutiny as MP’s, both Conservative and from the opposition, demand answers over his actions during the first lockdown.

At this time, large outdoor gatherings were banned in England, however witnesses have revealed that Johnson was in attendance of a garden party with 30 individuals. Johnson has refused to comment.

Liberal Democrat leader, Sir Ed Davey, has argued that Johnson was ‘incapable of leading our country’ during the pandemic and has regarded him as a ‘threat’ to the UK as the public will no longer respect nor listen to his announcements.

Labour's deputy leader, Angela Rayner, has said that Johnson’s position as Prime Minister is now ‘untenable’.

Rayner said:

‘The prime minister cannot break the law, lie to the British public and not be held to account for that.’

Meanwhile, Johnson has announced that the situation is to be handled by the senior civil servant in charge of investigating the incident, Sue Gray.

This is placing pressure on Sterling as it raised fresh doubts over the future of the Prime Minister

Euro (EUR) Mixed as Industrial Production Overshoots Market Forecast

The Euro (EUR) is directionless against the Pound (GBP) this morning in spite of industrial production exceeding expectations.

November’s industrial production surged from October’s contraction of 1.3%, overshot a forecast rise of 0.5% and to climb by 2.3%.

Following three-months of contraction, November’s figures are a positive lift for the sector, with non-durable consumer goods production showing the largest increase, printing at 3.2%.

Additionally, capital goods showed 1.5% growth, energy showed 1.2% and intermediated goods, 0.9%.

On the other hand, durable consumer goods, including washing machines and televisions, declined by 0.2%.

Despite the upbeat data, yearly industrial activity shrank by 1.5% in November, undershooting expectations of 0.6%.

Coronavirus is also causing pressure on the single currency’s potential as new infections continue to rise across the Eurozone, with the largest EU economy, Germany, hitting a new record.

Over 80,000 cases have been reported in Germany, with 384 deaths recorded on Tuesday, increasing the death toll to 114,735.

This is weighing on EUR’s appeal as investors remain cautious of the Eurozone’s future with regards to the pandemic.

GBP/EUR Exchange Rate Forecast: Will UK GDP boost GBP?

Looking ahead, the Pound Euro (GBP/EUR) exchange rate is likely to be influenced by a variety of UK data scheduled for release on Friday.

The main focus will be on the UK’s latest GDP release, with November’s monthly figures potentially buoying Sterling if they confirm forecasts growth accelerated from 0.1% to 0.4%.

The UK’s industrial production for November is forecast to show 0.2% growth, up from October’s contraction of 0.6%. If the predictions are correct, this will show improvement in the industry.

On the other hand, EUR is likely to be impacted by speeches from various Europe Central Bank’s policymakers, as well as president, Christine Lagarde.

Both GBP and EUR are likely to remain susceptible to Coronavirus developments and Brexit negotiations.

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