Pound to Euro Exchange Rate Edges Higher despite Lack of Sterling Support
The Pound Sterling to Euro (GBP/EUR) exchange rate has recovered since last night. This is despite a gloomy outlook for the Pound (GBP), and is largely due to investors adjusting positions before the end of the month.
Since opening this week at the level of 1.0996, GBP/EUR has seen mixed movement. GBP/EUR briefly tumbled to a low of 1.0900 at the beginning of the week, its worst level in a quarter.
However, since then GBP/EUR has been recovering. At the time of writing on Wednesday morning, GBP/EUR trends above the week’s opening levels in the region of 1.1036.
Demand for the Euro (EUR) remains fairly resilient. However, it is being dampened this week by rising safe haven demand boosting demand for its rivals. This is also helping the Pound to gain slightly versus the Euro.
Pound (GBP) Exchange Rates Benefit from Rival Weakness and Month-End Movement
The Pound has been kept under pressure for weeks, and Britain’s outlook is still filled with uncertainties. Despite this, the British currency has been recovering slightly since yesterday.
This is partially due to investors buying Sterling from its lows as Q2 2020 comes to an end. However, GBP is also benefitting from weakness in rival currencies. According to Mark Haefele, Chief Investment Officer at UBS Global Wealth Management:
‘We believe UK markets are in pole position to play catch-up,
In particular, we see Sterling as the most notable beneficiary of the vulnerability of the US dollar, which we expect to fall as safe-haven flows reverse and as political uncertainty mounts ahead of the November US presidential election,’
Today’s UK data had little impact on Sterling. Markit’s manufacturing PMI met projections, with analysts noting that much uncertainty still clouded Britain’s outlook.
Euro (EUR) Exchange Rates Slip but Buoyed by Strong Eurozone Data
Investors are selling the Euro a little today, following a highly bullish quarter for the shared currency.
While the Euro is sliding today, it continues to hold most of its recently impressive gains against many major currency rivals.
What’s more, the Euro’s losses are limited as Eurozone data continues to indicate that the bloc is weathering the coronavirus pandemic well.
Markit’s final June manufacturing PMIs for the Eurozone were published today. The stats beat forecasts in most major prints.
According to Chris Williamson, Markit’s Chief Business Economist:
‘This remarkable turnaround implies very strong month-on-month gains in the official production numbers for the past two months.
Expectations for the year ahead have also rebounded sharply as hopes grow that the economy will continue to find its feet again in the coming months.’
Pound to Euro (GBP/EUR) Exchange Rate Outlook Still Filled with Gloom
While the Pound to Euro exchange rate recovered slightly today, the Pound outlook is still filled with uncertainties.
Investors have doubts over the health of Britain’s economy. Criticism over the UK government’s handling of the coronavirus pandemic and Brexit also persist.
In fact, even if upcoming UK data impresses investors, it may only offer the Pound some slight support.
Britain’s final June services and composite PMIs will be published on Friday. Coronavirus fears are likely to persist though.
On the other hand, the Euro could see stronger support if Eurozone data continues to impress.
Eurozone unemployment data and PMI stats due through the end of the week could keep pressure on the Pound to Euro (GBP/EUR) exchange rate if they beat forecasts.