Pound to Euro Exchange Rate Appeal Limited but Fed Uncertainty Weighs on Euro
Investors are once again attempting a Pound Sterling to Euro (GBP/EUR) exchange rate recovery this week. After dipping earlier in the week, the pair is now rising as investors sell the Euro (EUR) ahead of today’s upcoming Federal Reserve policy decision.
Could we see a repeat of last week though? Last week saw GBP/EUR briefly jump higher in the middle of the week, but the pair ultimately closed the week lower in the region of 1.0977.
This week, GBP/EUR briefly slipped to hit its worst level of July so far; 1.0934. Last night though, GBP/EUR rebounded around half a cent. At the time of writing on Wednesday, GBP/EUR is trending closer to the level of 1.1031.
Many key Eurozone stats are due towards the end of the week. For now though, investors are focused on the upcoming Federal Reserve policy decision.
Pound (GBP) Exchange Rates Seeing Rebound Attempts despite Lack of Support
Investors continue to attempt to buy the embattled Pound back from its cheapest levels. Due partially to some weakness in rivals, as well as speculation for progress in coronavirus vaccines, Sterling has been attempting to bounce back slightly.
This is despite the British currency lacking much in the way of solid support.
While some of the UK data published over the past week has beaten forecasts, it has not been enough to improve the Pound’s gloomy outlook amid coronavirus and Brexit uncertainties.
Today’s Bank of England (BoE) consumer credit data also showed a record decline.
Euro (EUR) Exchange Rates Slip Ahead of Federal Reserve Policy Decision
The Euro remains one of the market’s most appealing major currencies overall. However, investors are selling it slightly from its best levels this week.
While the Federal Reserve is not expected to make any shifts in policy at this evening’s policy decision, anticipation for the decision is causing investors to moderate their positions on major currencies.
This is weighing on the Euro and driving it slightly lower.
Concerns that the EU Recovery Fund doesn’t go far enough, as well as speculation that the European Central Bank (ECB) could further ease monetary policy, are also weighing on the Euro’s appeal.
Pound to Euro (GBP/EUR) Exchange Rate Outlook Remains Low despite Rebounds
While the Pound to Euro exchange rate is attempting rebounds today, the pair’s potential for gains is highly limited.
For one, there is little news that could boost the Pound’s appeal expected until next week. The Bank of England (BoE) will hold its August policy decision next week.
Instead, investors are likely to react to upcoming major Eurozone news, as well as Federal Reserve news that could also influence the Euro.
This evening will see the Federal Reserve hold its anticipated July policy decision. Markets speculate that the bank could be pressured into taking a more cautious stance on the US economic outlook due to concerns over the US coronavirus infection rate.
If the Fed is more dovish, the Euro could see even stronger support and GBP/EUR would tumble. On the other hand, a surprisingly optimistic Fed could boost the Euro’s rival the US Dollar (USD) and make it easier for GBP/EUR to climb.
Key Eurozone data due towards the end of the week, including Eurozone growth and inflation, could also influence the Pound to Euro (GBP/EUR) exchange rate outlook.