Pound to Euro Exchange Rate Continues Fall despite Lack of Drive in Euro
Despite UK economic hopes and Bank of England (BoE) news boosting the Pound (GBP) last week, the Pound Sterling to Euro (GBP/EUR) exchange rate saw even deeper losses yesterday alone. It showed that Sterling remains highly sensitive to Brexit uncertainty.
After opening last week at the level of 1.1856, GBP/EUR spent most of the week trending lower.
Following the week’s Bank of England (BoE) news though, GBP/EUR saw a surge in demand and closed the week at the level of 1.1902. This was just below the pair’s best levels since December.
However, the Pound plummeted across the board when markets opened yesterday. GBP/EUR shed around a cent and a half yesterday, and is falling further today as Brexit concerns continue to flare up again.
At the time of writing, GBP/EUR is trending near lows of 1.1713 – the pair’s worst levels in a fortnight.
Pound (GBP) Exchange Rates Plummet as Brexit Fears Return
Investors piled into the Pound last week. A combination of UK economic growth hopes and a less dovish than feared Bank of England (BoE) boosted Britain’s outlook.
However, in an example of how sensitive the Pound continues to be to Brexit developments, the British currency has quickly shed much of its recent strength since yesterday.
UK Prime Minister Boris Johnson has kept up a tough stance on UK-EU negotiations, since Britain left the EU at the end of last week,
Johnson has indicated that he will not allow Britain to remain aligned with EU rules or regulations after the end of 2020’s transition period.
This, as well as an equally tough opposite stance from EU negotiators, caused hard Brexit fears to return yesterday. Sterling continues to fall today as Brexit fears still dominate its movement.
Euro (EUR) Exchange Rate Strength Limited Even as Eurozone Data Beats Forecasts
The Euro (EUR) was fairly unappealing yesterday. The Euro saw less gains against the broadly weak Pound than other major rivals did.
Market demand for the Euro was limited. Recent Eurozone data continues to show a mixed outlook for the currency bloc.
However, the biggest reason for the Euro’s limited strength was stronger appeal for the Euro’s biggest rival, the US Dollar (USD). This is due to the Euro’s negative correlation with the US Dollar.
Strong gains in the US Dollar (USD) and other major currencies weakened the Euro as coronavirus fears lightened yesterday.
As a result of rival strength, even yesterday’s stronger than expected Eurozone manufacturing PMIs failed to give the Euro much of a boost.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Services PMIs but Brexit Jitters Persist
The Pound to Euro (GBP/EUR) exchange rate continues to see weak, jittery movement today. Investors digest that a new period of Brexit uncertainty is ahead.
However, the Pound could soon steady from the latest hard Brexit fears if they don’t worsen further. This may leave GBP/EUR investors more focused on data again in the coming sessions.
Wednesday will see the publication of this week’s most notable UK ecostats.
Markit’s UK services and composite PMIs will give investors a better idea of how Britain’s economy performed last month. If they impress, they could boost hopes that Britain’s economy is seeing an activity rebound in 2020.
Investors will also be closely watching Eurozone data, with key stats due through the remainder of the week. January services and composite PMIs, as well as December retail sales, will be published tomorrow.
If the Eurozone’s upcoming data beats forecasts, they could bolster hopes that the Eurozone economic outlook is recovering as well. This could bolster the Euro’s support and keep pressure on the Pound to Euro (GBP/EUR) exchange rate.