EUR/GBP Exchange Rate Slips from Best Levels
The Euro Pound (EUR/GBP) exchange rate has fallen back from a five-month low this morning, but with no clear fundamentals supporting Sterling’s recovery, how long will the slump last?
At the time of writing EUR/GBP exchange rate is down roughly 0.4% from today’s opening levels, leaving the pairing trading just shy of a five-week low at £0.8854.
Does the Pound (GBP) Rally Have Legs?
Having plummeted to a fresh five-month low on Thursday, the Pound (GBP) appears to be mounting a tentative recovery this morning.
But with no clear catalyst driving the recovery, will this prove to be any more than a dead cat bounce?
Sterling found itself caught up in the sell-off which rocked markets on Thursday, with the currency being undermined by fresh Brexit uncertainty mixed with heightened concerns over the coronavirus.
As the coronavirus crisis continue to grow in severity, officials made the decision to cancel the next round of UK-EU Brexit trade talks next week.
With the UK government still set on its timetable for ending the transition period at the end of 2020 it’s feared any delays to talks will make it even more difficult for the two sides to reach a deal in time.
Alongside more general fears regarding the coronavirus’ economic impact on the UK, with reports the government is close to shutting down all schools, there is a clear risk of the Pound’s rally quickly fizzling out.
Euro Muted as Europe Continues to Grapple With Coronavirus Outbreak
Meanwhile, as Europe’s coronavirus outbreak continues to spread, EUR investors are growing increasingly wary over the slow fiscal response from EU governments.
In announcing plans to expand its quantitative easing programme to offer support on Thursday, the European Central Bank (ECB) again put out a call for EU leaders to step up their fiscal response
ECB President Christine Lagarde said:
‘Governments and all other policy institutions are called upon to take timely and targeted actions to address the public health challenge of containing the spread of the coronavirus and mitigate its economic impact.
‘In particular, an ambitious and coordinated fiscal policy response is required to support businesses and workers at risk.’
While much has been made over possible stimulus measures European governments will take to help limit the economic impact of the coronavirus, so far there has been very little concrete information about what this may include, much to the disappointment of markets.