Pound to Euro Exchange Rate Climbing as EU Recession Fears Rise
Following yesterday’s slip, the Pound Sterling to Euro (GBP/EUR) exchange rate is climbing again today. Investors are steadying positions on the Pound (GBP) ahead of tomorrow’s UK Budget news, while the Euro (EUR) is sliding on gloomy EU forecasts.
After opening last week at the level of 1.0997, GBP/EUR briefly slipped lower. The pair touched on a quarterly low of 1.0909 before rebounding and ending the week higher.
GBP/EUR closed last week at the level of 1.1098. Yesterday saw GBP/EUR tumble as the Euro benefitted from rival weakness, but the pair is recovering again today and trends in the region of 1.1063 at the time of writing.
The latest European growth forecasts are concerning Euro investors today. Investors continue to await UK and EU coronavirus developments.
Pound (GBP) Exchange Rates Sturdier Ahead of UK Summer Statement
Britain’s coronavirus and Brexit outlooks remain filled with uncertainties. This is making it difficult for Sterling to mount a more solid recovery lately.
However, there is also optimism over Britain’s coronavirus outlook. More businesses begun to reopen from lockdown over the past week. Markets are hoping that the number of UK infections will continue to fall.
Due to hopes for recovery from the pandemic, as well as anticipation for tomorrow’s UK Budget news, Sterling is seeing more solid demand today. This is helping it to edge higher against a slightly weaker Euro.
According to Analysts at Brown Brothers Harriman, investors are hoping for something UK Chancellor Rishi Sunak will impress at the supplementary Summer Statement presentation tomorrow:
‘Prime Minister Johnson’s so-called New Deal for infrastructure spending was deemed insufficient and so UK business interests are urging Sunak to be more aggressive,’
Euro (EUR) Exchange Rates Weighed by EU’s Gloomy Forecasts
The Euro has seen months of strong performance. Markets have been impressed with the EU’s handling of the coronavirus pandemic, and were optimistic that the Eurozone would see a solid recovery.
However, investors sold the Euro slightly today, in response to some fresh forecasts from the European Commission (EC).
The group slashed economic forecasts for much of the Eurozone. The EC said that the coronavirus pandemic’s impact will be even worse than previously expected, so the group predicts deeper than previously expected recessions.
Investors were more willing to sell the Euro, as a combination of ‘second wave’ fears and Eurozone recovery uncertainty weighed on the shared currency.
Pound to Euro (GBP/EUR) Exchange Rate Awaits UK Summer Statement
While the European Commission’s (EC) forecasts did weaken the Euro slightly, this week’s Pound to Euro exchange rate movement has been fairly muted overall so far.
Investors may remain hesitant to move much on the Pound until there is more surprising news.
Tomorrow’s UK Summer Statement, a supplementary Budget from UK Chancellor Rishi Sunak, could be the biggest news of the week for Sterling.
If investors are impressed with any of the Chancellor’s planned stimulus, the Pound is more likely to mount a more solid recovery.
As for the Euro, comments from European Central Bank (ECB) officials could cause some movement tomorrow, and Germany’s May trade results on Thursday could also prove influential.
Of course, any surprising Brexit developments will also have an impact on the Pound Sterling to Euro (GBP/EUR) exchange rate.