GBP/EUR Exchange Rate Rangebound, Eurozone Economic Outlook Remains Uncertain
The Pound Euro (GBP/EUR) exchange rate held steady today following the release of the latest French trade data, which showed that the nation’s trade deficit had widened, with exports falling by as much as 2.0% in July, while imports improved marginally. The pairing is currently fluctuating around €1.16.
With the Eurozone economy growing more than initially estimated in the second quarter, demand for the single currency has risen, with confidence growing in the bloc’s economic rebound later this year.
Maria Martinez, an analyst at Market Watch, comments:
‘Across the 19 countries that use the euro as their currency, gross domestic product expanded by 2.2% from the previous quarter, Eurostat said Tuesday as it reported its third estimate for the period. According to the second estimate, the economy had grown by 2.0%.
‘The European Union’s statistics office revised the on-year figure for the first quarter to a 1.2% contraction from the 1.3% drop previously estimated.’
Mixed data this week has however limited the EUR/GBP exchange rate with German ZEW survey of economic sentiment printing below forecasts, falling to its lowest level since March last year.
As a result, Euro investors have become increasingly concerned about the outlook for the Eurozone’s largest economy and the bloc as a whole.
Pound (GBP) Exchange Rate Steady as ‘Firebreak’ Lockdown Fears Limit Sterling
The Pound (GBP) held steady today following Downing Street’s hints of a possible ‘firebreak’ lockdown in October. Although this has been rejected by the Health Minister Sajid Javid, Sterling investors have remained cautious.
A sudden lockdown next month would impede the UK’s economic recovery, hitting both the manufacturing and services sector.
Added to this, the Confederation of British Industry (CBI) has warned that staff shortages could last two years.
Tony Danker, CBI director general, said:
‘The CBI has heard from companies actively cutting capacity because they can’t meet demand, like the hoteliers limiting the number of bookable rooms because they don’t have enough housekeeping staff and can’t get linen laundered.
‘Meanwhile some restaurant owners have had to choose between lunchtime and evening services when trying to make the most of summer.’
In absence of UK economic data today, any signs of rising Covid-19 hospitalisations could see the GBP/EUR exchange rate begin to fall.
Pound to Euro Exchange Rate Forecast: ECB Interest Rate Decision in Spotlight
Euro (EUR) traders will be looking ahead to tomorrow’s interest rate decision from the European Central Bank (ECB). Could a dovish tone from the bank and monetary policy committee see the single currency suffer?
Tomorrow will also see the release of the German trade data. If the outlook for Eurozone’s largest economy becomes dim, then this would be EUR-negative.
The GBP/EUR exchange rate could fall tomorrow if UK Covid-19 infections and hospitalisations continue to rise. This would spark-off fears of a possible ‘firebreak’ lockdown next month, which would be damaging to the Pound.