Pound to Euro Exchange Rate Holds Near 3-Week-Best
Updated 16:41 BST 02/04/2020:
A lack of appeal in the Euro (EUR) made it easier for the Pound Sterling to Euro (GBP/EUR) exchange rate to keep holding its best levels today.
GBP/EUR continued to trend near its best levels in three weeks, 1.1415.
A fresh boost in demand for safe havens like the US Dollar (USD) in the afternoon only put further pressure on the Euro. US jobless claims soared by a horrifying 6million, pushing investors to safe havens.
The Pound (GBP) benefitted from Euro weakness despite concerns over Britain’s own economic outlook. For now, Euro investors remain increasingly anxious about divisions among EU nations over proposed ‘coronabonds’.
(Originally published 08:34 BST 02/04/2020)
Pound to Euro Exchange Rate Climbing despite Lack of Fresh Drive in Pound
Investors continue to buy the Pound Sterling to Euro (GBP/EUR) exchange rate this week. This is despite the gloomy outlooks in the Pound (GBP) and UK. It is due to building pressure on the Euro (EUR) as EU nations struggle to agree on coronavirus measures.
While not as impressive as last week’s huge three cent surge, GBP/EUR is seeing solid gains this week.
GBP/EUR opened the week at the level of 1.1171 and has been making incremental jumps throughout the week so far. GBP/EUR touched on a three-week-high of 1.1374 yesterday and currently trends a little lower, in the region of 1.1329.
The Pound’s outlook has not changed notably this week. However, while the coronavirus pandemic still dampens Britain’s outlooks, the Euro could see increased pressure from it if the fiscal stimulus situation does not improve.
Pound (GBP) Exchange Rates Benefitting from Rival Weakness despite Lack of Drive
The movement that drove the Pound much higher last week appears to be persisting for now. This is despite a lack of particularly supportive developments for the currency’s outlook.
This week has seen the number of coronavirus cases and deaths in Britain surge. The UK government has not taken any significant new steps on fiscal stimulus, but is still facing pressure to do more.
However, the Pound continues to climb against many major rival currencies. It has benefitted from periods of US Dollar (USD) weakness this week as well as of course the Euro’s current weakness.
Yesterday’s UK manufacturing PMI for March wasn’t quite as bad as first projected. This is supporting the Pound a little against the Euro as the Eurozone saw many worse-than-expected stats.
Euro (EUR) Exchange Rate Outlook Dampened as EU Nations Struggling to Compromise
The EU has been offering more support to EU nations and nations have been able to begin ramping up individual fiscal stimulus plans. However, plans for more coordinated action from the EU as a whole have faced obstacles.
Many EU nations as well as European Central Bank (ECB) President Christine Lagarde have suggested EU-wide ‘coronabonds’. However, some more hawkish nations like Germany and The Netherlands have objected.
According to Yohay Elam, Analyst at FXStreet:
‘The Eurozone remains split between the camp demanding to mutualize the debt and show solidarity, and the one opposing it, led by Germany. The potential political crisis is weighing on the common currency.’
Still, many EU officials remain optimistic. EU Industry Chief Thierry Breton said today that he was convinced that nations ‘will be able to converge’.
Pound to Euro (GBP/EUR) Exchange Rate Investors Awaiting Fiscal Stimulus Developments
Much of this week’s Pound to Euro exchange rate movement has been due to lingering market sentiment from last week’s gains. On top of this though, concerns about fiscal stimulus disagreement in the EU continue to build.
As a result, the Euro outlook may become even more focused on EU fiscal stimulus going forward.
If EU leaders continue to clash over potential stimulus to protect the Eurozone against the coronavirus, the Euro may come under deeper pressure.
On the other hand, signs of positive developments in discussions between EU leaders may make investors more willing to buy the Euro as a safe haven again.
Upcoming UK and Eurozone data may also be influential. Services and composite PMIs from March will be published tomorrow.
If UK services data is much worse than expected, this could dampen the Pound to Euro (GBP/EUR) exchange rate outlook.