GBP/EUR Exchange Rate Rangebound as UK Manufacturing Sector Remains in Doldrums
The Pound to Euro (GBP/EUR) exchange rate saw an uptick by 0.1% this morning, with the pairing currently fluctuating around €1.10.
Sterling has benefited today on growing hopes for Britain’s economic recovery, with Prime Minister Boris Johnson now expected to announce a relaxation of social distancing guidelines.
However, Security Minister James Brokenshire, was more cautious about the UK’s plans to further ease lockdown restrictions, saying:
‘It is concerning to see the situation in Germany [where an increase in Covid-19 cases has recently been reported] and it’s why we are informed in our actions by experience from around the world, why the chief scientific officer, the chief medical officer, speak to their counterparts in different parts of the world to ensure that we are applying the best learning and the best experience in informing our next steps.’
Meanwhile, today saw the release of the UK’s CBI Industrial Trends Survey report on factory orders for June., which beat forecasts and edged higher from -62 to -58.
However, this was their worst quarter on record, leaving many Sterling investors concerned for the UK’s economic recovery in the months ahead.
Anna Leach, CBI Deputy Chief Economist, commented on the data:
‘The UK manufacturing sector remained in a deep downturn in June due to the ongoing COVID-19 crisis…. Firms are again hoping that this will ease somewhat in the next three months.’
Euro (EUR) Steady as Fears of Covid-19 Second-Wave in Germany Intensify
The Euro (EUR) failed to gain on the Pound (GBP) after several new cases of coronavirus were reported to have cropped in Germany, the Eurozone’s largest economy.
Fiona Cincotta of City Index commented:
‘Even though the number of cases in Germany is low, the rise is unnerving. The markets will be watching developments closely here. Germany has been relatively successfully in keeping deaths low and reducing the spread quickly in the first wave, investors will need to this second wave nipped in the bud to boost optimism that a second wave won’t be as devastating the first.’
However, with global market risk sentiment plummeting on fears of a second wave of Covid-19 cases, investors are flocking back to safe-haven currencies like the Euro.
Meanwhile, EUR investors will be looking ahead to this afternoon’s speech by Luis De Guindos, the Vice President of the European Central Bank (ECB).
Any dovish comments about the Eurozone’s economy would prove negative for the single currency.
GBP/EUR Forecast: Could Weak Eurozone Data Drag Down the Euro This Week?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the Eurozone’s Composite PMI report for June. Any signs of improvement in the bloc’s economy this month would prove EUR-positive.
Tomorrow will also see Germany’s Manufacturing PMI for June. However, with the figure expected to remain in contraction territory, we’re unlikely to see the single currency edge significantly higher.
Tomorrow will also see the release of the UK’s latest Services PMI for June. Any indications that the UK’s largest sector could be on the road to improvement would prove GBP-positive.
The GBP/EUR exchange rate could edge higher this week if Downing Street announces a relaxation of the social distancing guidelines. As a result, Sterling could edge higher on hopes for the UK’s economic recovery going forward.