Euro Pound Sterling (EUR/GBP) Exchange Rate Edges Higher Following Johnson’s Coronavirus Announcement
The Euro Pound Sterling (EUR/GBP) exchange rate edged up by around 0.5% this morning. This left the pairing trading at around £0.8782.
Sterling slipped against the single currency on Monday morning as investors remained cautious about the easing of lockdown measures.
British Prime Minster Boris Johnson is expected to give further details on how to get the economy back to work later today.
This follows yesterday’s televised address in which he announced limited easing of coronavirus restrictions.
While sentiment received a boost after several countries moved to re-open their economies, investors remained cautious about the easing of restrictions in the UK.
Prime Minister Boris Johnson is encouraging some people to return to work if they are unable to work from home.
GBP remained under pressure as the Prime Minister made it clear he wants the rest of the UK to follow his approach. This has been met with criticism and the leaders of Wales, Scotland and Northern Ireland have all announced they will be sticking to the current ‘stay-at-home’ message.
Commenting on this, Viraj Patel, FX and global macro strategist at Arkera noted:
‘Mixed start to the week for the Pound – with the cautious UK lockdown easing announced by PM Johnson having little lasting impact on the currency after an initial rally in early Asia trading. Instead, the Dollar remains supported by rising US yields.’
Euro (EUR) Edges Higher as Coronavirus Cases in Germany on the Rise
Meanwhile, data from the bloc’s largest economy showed coronavirus infections are rising once again.
Just days after Germany eased its lockdown restrictions the number of coronavirus cases has increased.
Added to this, investor sentiment remained under pressure after Wuhan reported its first cluster of coronavirus cases since the lockdown was lifted a month ago.
Sentiment was offered a further blow after South Korea warned of a second wave as countries around the world began to ease restrictions.
Meanwhile, the single currency was able to make gains against the riskier Pound as the UK and EU are set for further post-Brexit trade talks.
The penultimate round of talks are due to start today as little progress has been made on major sticking points.
Prime Minister Boris Johnson has repeatedly refused to prolong the current transition period despite the push from the EU.
The end of these talks will mark a deadline for both sides to agree on whether or not there will be an extension of talks. The European Union fear the UK will refuse to extend talks, increasing the risk of huge disruption.
Euro Pound Outlook: Will PM Johnson’s Plans Reassure Markets?
Looking ahead, the Pound (GBP) could make gains against the Euro (EUR) if Prime Minister Boris Johnson’s plans to ease the lockdown reassure markets.
According to ING strategists:
‘Despite facing much criticism for muddying the waters with his speech to the nation last night, Prime Minister Boris Johnson’s efforts to restart the economy may be welcomed by the Pound.
‘Euro-Sterling in particular has started to trade in an uncharacteristically tight range – roughly between 0.87 and 0.88 – and let’s see whether momentum builds on the downside.’
If Johnson’s 50-page plan presented to parliament reassure markets, the Euro Pound (EUR/GBP) exchange rate could slide.