GBP/EUR Exchange Rate Rises on Mixed Messages from ECB
The Pound Euro exchange rate rose by 0.3% today following dovish comments from the European Central Bank’s (ECB) President Christine Lagarde. The pairing is currently fluctuating around €1.16.
The Euro (EUR) struggled today after Lagarde highlighted some downside risks to the Eurozone’s economy.
Lagarde told the European Parliament committee:
‘While on the downside, the spread of virus mutations continues to be a source of risk, on the upside, brighter prospects for global demand and a faster-than-anticipated increase in consumer spending could result in an even stronger recovery.’
The mixed mood of Lagarde’s speech has limited the appeal of the single currency today, with concerns that the Delta Covid-19 virus could prove a problem to Europe in the coming months.
Added to this, French political uncertainty has also weighed on the Euro, with President Macron’s party falling low in the exit polls.
As a result, single currency investors are concerned that one of the Eurozone’s largest economies could face political uncertainty later in the year.
Pound (GBP) Exchange Rate Edges Higher as PM Says it’s ‘Looking Good’ for July Easing of Lockdown Measures
The Pound (GBP) rose today after Prime Minister Boris Johnson expressed confidence in the final lifting of lockdown measures on 19 July.
Boris Johnson said it was now ‘looking good’ for the final lift of lockdown restrictions next month. He commented:
‘You can never exclude that there will be some new disease, some new horror that we simply haven’t budgeted for, or accounted for.
‘But looking at where we are, looking at the efficacy of the vaccines against all variants that we can currently see – so Alpha, Delta, the lot of them, Kappa – I think it’s looking good for July 19 to be that terminus point.’
In UK economic news, the nation’s tourism and hospitality improved in May, thanks to the easing of lockdown measures.
According to Lloyds Bank UK Recovery Tracker, 11 out of 14 sectors in the UK had reported faster growth in output month-on-month in May.
Jeavon Lolay, the head of economics and market insight for commercial banking at Lloyds Bank, commented:
‘Whether the four-week delay to further easing of restrictions will impact this trend is unclear. But while the delay is understandably disappointing for many businesses, there’s no denying that the economy is now on a much sounder footing.’
GBP/EUR Exchange Rate Outlook: UK PMI Data in Focus
Euro (EUR) traders will be awaiting tomorrow’s speeches from the European Central Bank’s (ECB) Philip Lane and Isabel Schnabel tomorrow.
Any upbeat commentary about the outlook for the Eurozone’s economic outlook would be EUR-positive.
Tomorrow will also see the release of the flash Eurozone consumer confidence gauge for June.
If Eurozone consumer morale improves, then the EUR/GBP exchange rate could claw back some of its losses.
Pound (GBP) traders will be awaiting Wednesday’s release of the flash UK PMI figures for services and manufacturing.
We could see the Pound Euro exchange rate head higher this week if the outlook for the UK economy continues to improve.