GBP/EUR Exchange Rate Rangebound as Eurogroup Enters Round Two of Debates
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently trading around €1.133.
The Euro (EUR) struggled today after yesterday saw the European Union failed to agree on a unified economic stimulus response to the bloc’s coronavirus crisis.
In what seemed like a repeat of previous weeks, France and southern Europe – including Italy and Spain – were again challenged by their northerly allies, such as Germany, Austria and the Netherlands.
Consequently, the Euro’s gains have been compromised by what looks likes an increasing divide within the European Union.
However, Mario Centeno, the Chairman of the Eurogroup, said that talks would continue today.
Mr. Centeno summarised yesterday’s meeting that the EU’s his goals going forward:
‘After 16 hours of discussions we came close to a deal, but we are not there yet. I suspended the Eurogroup and [we will] continue [on Wednesday]. My goal remains: A strong EU safety net against a fallout of [the coronavirus] (to shield workers, firms &countries) and commit to a sizeable recovery plan.’
The Euro’s gains are also limited by rising fears of the Eurozone’s impending recession and rising unemployment, which has left many investors feeling wary of the single currency today.
Pound (GBP) Steady as Boris Johnson Remains in Intensive Care
The Pound (GBP) failed to many any notable gains on the Euro (EUR) today after Prime Minister Boris Johnson spent his second night in intensive care, leaving markets concerned over a growing political vacuum as foreign secretary Dominic Rabb deputises as leader.
However, after Downing Street said that Boris Johnson is in a stable condition, the GBP/EUR exchange rate has flattened out.
Yesterday also saw the number of daily UK coronavirus-related fatalities reach a record high, leaving many investors wary of the Pound as the death toll reaches 6,159.
Analysts such as Patrick Locke, a strategist at JP Morgan, were also pessimistic about investment flows into the UK during its course of economic disruption with both Brexit and the coronavirus pandemic.
Mr Lock commented:
‘[W]e are not convinced that this early in the process it is possible to handicap the relative resilience of different economics to the COVID fallout, irrespective of the extent and significance of domestic policy support. So, while the UK government and BoE have been pro-active and indeed creative in broadening the reach of public sector support to the economy, we do not yet regard this as source of meaningful reassurance for GBP.’
GBP/EUR Forecast: Could Gloomy ECB Meeting Accounts Weigh on the Euro?
Pound (GBP) investors will be awaiting tomorrow’s release of the UK industrial and manufacturing production reports for February. Any deterioration in either sector would prove GBP-negative.
Tomorrow will also see the publication of the UK’s GDP report for February, which is expected to rise to increase by 0.1%.
Euro investors will be awaiting tomorrow’s European Central Bank’s (ECB) Monetary Policy Meeting Accounts. If the ECB is notably downbeat about the Eurozone’s economy going forward, however, we could see the GBP/EUR exchange rate rise.