Pound to Euro Exchange Rate Slips after First Advance in a Month
Demand for the Pound (GBP) improved a little last week, but the Pound Sterling to Euro (GBP/EUR) exchange rate outlook remains gloomy. Today’s Eurozone data was mixed though, so the Euro’s (EUR) appeal is also limited.
After opening last week at the level of 1.0997, GBP/EUR briefly slumped. GBP/EUR touched on a low of 1.0904. This was the worst level for the pair in a quarter, since March.
After that point though, GBP/EUR rebounded. Investors bought Sterling back from its lows and GBP/EUR ended the week higher, at just about the level of 1.1100.
This morning GBP/EUR has slipped to the level of 1.1060. It still sustains most of last week’s gains however.
Pound (GBP) Exchange Rate Outlook Jittery as Markets Await Coronavirus and Brexit News
Last week, investors bought the Pound back from its worst levels. This was largely a quarter-end movement related to profit-taking.
However, some market optimism over Brexit helped the British currency towards the end of the week as well. Speculation has risen that there could be major Brexit developments over the next month.
According to Yohay Elam from FXStreet though, the Pound’s gains on Brexit hopes last week could be short-lived:
“Many expect talks to heat up only after the summer and closer to the deadline, so that may have to wait for another week.”
Pound investors are also anxious as Britain’s economy reopens. While there are hopes for economic recovery, a close eye will be kept on Britain’s coronavirus situation.
Euro (EUR) Exchange Rate Buoyancy Lacking as German Factory Stats Disappoint
The Euro outlook is fairly optimistic still overall. The EU’s handling of the coronavirus pandemic has been generally positively received by markets, and more fiscal stimulus is expected.
On top of this, the Eurozone’s latest ecostats have been generally optimistic. Much recent data has beaten forecasts, pointing towards resilience in the economy amid the coronavirus pandemic.
However, today’s German factory orders data fell short of forecasts. Rather than rebounding to the forecast 15%, it only jumped to 10.4%. While a more positive figure overall, it wasn’t enough to bolster the Eurozone outlook.
Some of today’s other Eurozone data was more optimistic though. The Eurozone’s June construction PMI jumped to 48.3 from 39.5.
Pound to Euro (GBP/EUR) Exchange Rate Focused on Coronavirus Developments as UK Reopens
Analysts reckon investors will be closely watching for UK coronavirus pandemic developments.
With more UK businesses including pubs and restaurants opening in recent sessions, there are hopes for an economic rebound. However there are also fears of a surge in infections.
As a result, Britain’s coronavirus situation could be one of the biggest focuses for GBP/EUR in the coming week. According to FXStreet’s Yohay Elam:
‘Investors will examine UK coronavirus cases, which are going in the right direction – down. If infections increase due to the current opening, it may take time to see it in the chart. Nevertheless, as long as it falls, Sterling will receive support.’
As for the Euro, more upcoming Eurozone ecostats, as well as comments from European Central Bank (ECB) officials, could also influence the Pound to Euro (GBP/EUR) exchange rate outlook this week.