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Could Huge Brexit Developments Influence Pound Sterling to Euro Exchange Rate Outlook?

Pound to Euro Exchange Rate Jittery as Investors Await Brexit and Coronavirus News 

The Pound Sterling to Euro (GBP/EUR) exchange rate is seeing fairly narrow trade since markets opened this morning. Expectations for potentially huge UK Brexit and coronavirus developments this week are keeping the Pound (GBP) volatile. 

Last week saw the Euro (EUR) benefitting from a jittery market, as GBP/EUR spent the week trending with a downside bias. After opening the week at the level of 1.1040, GBP/EUR trended lower and even briefly hit on a fortnight low of 1.0926 in the middle of the week. 

Still, GBP/EUR ultimately recovered most of the week’s losses. On Friday, GBP/EUR closed the week at the level of 1.1028. 

Since markets opened this morning, GBP/EUR has largely continued to trend close to the week’s opening levels. 

Developments in Britain’s coronavirus and Brexit situations could cause big changes to the Pound outlook. Meanwhile, the Euro (EUR) outlook could be influenced by upcoming speeches from European Central Bank (ECB) officials. 

Pound (GBP) Exchange Rates Jittery as Markets Await Major Developments 

Concerns over Britain’s coronavirus and Brexit situations are keeping pressure on the Pound so far this week. 

Britain’s coronavirus infection rate remains high, and the UK government is expected to introduce new restrictions in the coming week in order to limit spread. 

According to Analysts from ING Bank: 

‘Prime Minister Boris Johnson is widely expected to announce tougher lockdown restrictions, with a new three-tiered system to be applied to allow more severe local lockdowns.’ 

Investors are also anxious about the Brexit process, as the UK government’s self-imposed negotiation deadline of October 15th is mere days away. Uncertainty will persist until it becomes clearer that the deadline will be dropped. 

Euro (EUR) Exchange Rate Outlook Lacks Drive ahead of ECB Speeches 

In recent weeks, a lack of big surprises in the Euro outlook has left the shared currency being driven by strength in rival currencies. In particular, the strength of its rival the US Dollar (USD) has been particularly influential. 

As the US Dollar (USD) weakened last week, the Euro spent much of the week higher. It was able to benefit from some safe haven demand as well, due to market hesitance to buy the safe haven US Dollar. 

The Eurozone’s coronavirus outlook continues to gradually worsen, but there have been no notable surprises. The Eurozone’s outlook remains more optimistic than many other major economies. 

Today’s German wholesale prices data was a little worse than forecast, but ultimately had little impact on the Euro. 

For now, Euro investors are awaiting comments from European Central Bank (ECB) officials expected later in the week. 

Pound to Euro Exchange Rate Await Political and Central Bank Developments 

Brexit uncertainties persist, as this could be a highly influential week for the process. 

There is still speculation that the UK government could walk away from negotiations this week if it is not satisfied with progress in talks so far. 

As a result, markets will be closely awaiting Brexit developments, especially around the 15th of October – Thursday. 

Euro investors, on the other hand, will be highly anticipating upcoming speeches from European Central Bank (ECB) officials. 

ECB President Christine Lagarde has speeches set for Wednesday and Thursday. These, as well as US Dollar (USD) movements are more likely to influence the Euro’s movement than upcoming Eurozone inflation data. 

UK and Eurozone coronavirus developments are also likely to be closely watched. 

Changes in UK coronavirus restrictions and the Eurozone’s own developments have the potential to cause shifts in the Pound to Euro (GBP/EUR) exchange rate outlook if there are any surprises.