Pound Sterling Euro (GBP/EUR) Exchange Rate Muted as Traders Fret Over EU Rescue Package
The Pound Sterling Euro (GBP/EUR) exchange rate remained flat this morning, leaving the pairing trading at around €1.1483.
The pairing was left flat despite signs of progress in the reopening of economies, which boosted riskier assets.
Meanwhile, in Italy, the government has allowed factories and building sites to reopen from 4 May as it prepares to end Europe’s longest lockdown.
The Euro also remained under pressure as traders worry about the rescue package for the hardest hit and most heavily indebted countries in the bloc.
According to head of strategy at BNP Paribas Asset Management in London, Colin Harte:
‘Whereas the US, UK, Australia, China, and Japan, if needs be, can go to the printing presses, in Europe you’re constrained. I think there’s a little bit of a risk premium that’s creeping into the Euro on concerns about where do we go from here.’
Added to this, the single currency remained under pressure as markets awaited Thursday’s European Central Bank (ECB) monetary policy meeting.
Boris Johnson Warns Against Easing Restrictions Too Early
Meanwhile, the Pound remained flat against the single currency after Prime Minister Boris Johnson warned against easing restrictions too early.
At the start of the week, GBP was offered support as markets hoped Johnson would announce plans to ease lockdown restrictions.
While he did not announce this, Boris Johnson did say further details on how some restrictions will be lifted will be revealed later this week.
Added to this, Sterling remained under pressure after Kantar revealed British grocery sales rose 5.5% in the four weeks to 19 April.
This was down from record 20.6% growth in March as shoppers built up stocks before the UK’s lockdown was announced.
However, GBP was offered some support as traders look to this week’s central bank meetings.
Officials from the US Federal Reserve and ECB are expected to provide further stimulus to help fight the coronavirus.
Pound Euro Outlook: ECB Meeting in Focus This Week
Markets will be looking to Thursday’s European Central Bank (ECB) meeting which could cause the Euro (EUR) to slide against the Pound (GBP).
While the ECB are expected to leave rates unchanged, indecision and tensions surrounding a Eurozone rescue package has left markets expecting further action.
However, traders are expecting the ECB to provide further stimulus to support Europe’s economy.
Commenting on the upcoming central bank meetings, Commerzbank analyst, Thu Lan Nguyen noted:
‘The major central banks are at comparatively expansionary levels. All of them have beefed up asset purchases as much as they could. All of them are close to or even at the minimum lower interest rate bound.
‘They are likely to remain there for the foreseeable future, which would point towards relatively stable exchange rates.’