Pound to Euro Exchange Rate Kept Under Pressure amid Lack of Demand
The Pound (GBP) continues to be among the market’s least appealing currencies amid the coronavirus pandemic, and the Pound to Euro (GBP/EUR) exchange rate remains low. Coronavirus fears appear to worsening further this week.
For most of last week, GBP/EUR trended with mixed movement. GBP/EUR opened at the level of 1.1046 and hovered around those levels until Friday.
Before markets closed for the week though, GBP/EUR tumbled. GBP/EUR ultimately closed the week at 1.0997. GBP/EUR also touched on a low of 1.0988, the pair’s worst level in a quarter.
At the time of writing on Monday, GBP/EUR continues to trend below the major level of 1.10.
Key UK and Eurozone data in the coming sessions could be overshadowed by coronavirus and Brexit developments.
Pound (GBP) Exchange Rate Outlook Heavily Weighed by Broad Market Anxieties
This week sees the Pound (GBP) story little-changed. Last week’s stronger than expected UK data ultimately had little impact on the Pound outlook, due to broad coronavirus and Brexit fears.
Some analysts have said the Pound is becoming increasingly correlated to risk-sentiment. This is making Sterling even less appealing as global fears of a ‘second wave’ of coronavirus infections worsen.
The number of global coronavirus deaths has passed 500,000, a figure which has shocked global headlines today.
Britain’s Brexit situation is only further weighing on the Pound. Michel Barnier, the EU’s Chief Brexit Negotiator, continues to indicate that Britain’s negotiators lack a plan. He said over the weekend:
‘It insists on being able to diverge substantially from current EU rules on data protection, on financial services, on state aid — where the UK has given us no indication of the future framework it plans to put in place.’
Euro (EUR) Exchange Rates Remain Appealing on Stronger Eurozone Outlook
Despite rises in demand for the Euro’s biggest rival, the US Dollar (USD), the Euro has remained appealing.
The shared currency continues to perform well, due to market optimism over the Eurozone’s coronavirus outlook compared to some other major economies.
Investors are also optimistic that EU officials will continue to work towards a strong recovery plan for the Eurozone. According to analysts at ING:
‘On the calendar today is a meeting in late afternoon between German Chancellor Angela Merkel and French President Emmanuel Macron in an attempt to make progress on the EU Recovery Fund. The goal here is to lay the groundwork for a deal to be struck at the July 17-18 EU summit.’
Pound to Euro (GBP/EUR) Exchange Rate Outlook Remains Focused on Coronavirus
The Pound to Euro (GBP/EUR) exchange rate will continue to be driven by coronavirus developments in the coming week.
Pound investors are anxious about the UK government’s handling of the virus. New fiscal stimulus and other government action could influence Sterling movement.
As for the Euro, investors remain optimistic about the EU’s outlook. If EU officials continue to work towards a solid EU recovery plan that impresses, the Euro’s appeal could well persist.
Upcoming Eurozone data in the coming days could boost the Euro even higher if it impresses investors.
Eurozone inflation is due tomorrow. German retail and unemployment stats, as well as Eurozone manufacturing data, are all due Wednesday.
The Pound to Euro (GBP/EUR) exchange rate is unlikely to see much recovery unless investors are given more reason to buy the embattled Pound.