Pound to Euro Exchange Rate Struggles to Hold Best Levels as Safe Haven Demand Jumps
Updated 16:16 BST 03/04/2020:
The Pound Sterling to Euro (GBP/EUR) exchange rate began to fall back from its weekly highs before markets closed for the week. At the time of writing on Friday afternoon, GBP/EUR trended in the region of 1.1342.
Sterling (GBP) had benefitted from slightly softer market sentiment for most of the week. However, a shockingly bad US Non-Farm Payroll report this afternoon led to fresh market panic.
As the Euro has been perceived as relatively safe amid the coronavirus pandemic, the shared currency benefitted slightly.
However, if safe haven demand cools slightly next week, GBP/EUR could resume its advances. GBP/EUR investors remain anxious to see any fresh developments in fiscal stimulus over the next week.
(Originally published 08:42 BST 03/04/2020)
Pound to Euro Exchange Rate Trends Near 3-Week-Highs on Friday despite Mixed Sterling
A lack of impressive UK news this week has not been enough to hold back the Pound Sterling to Euro (GBP/EUR) exchange rate. Investors continued to buy Sterling (GBP) versus weaker rivals. Meanwhile, the Euro (EUR) saw pressure amid the EU’s uncertain fiscal stimulus plans.
As a result of these continued gains, GBP/EUR is on track to have seen another big gains. GBP/EUR gained around three cents the previous week and is likely to gain another two cents at least this week.
Since opening this week at the level of 1.1173, GBP/EUR has trended with an upside bias. GBP/EUR touched on high of 1.1434 last night. The pair still trends near those highs in the region of 1.1420 at the time of writing.
The Pound to Euro exchange rate could lose some ground going forward if the Pound’s outlook notably worsens though. Euro investors, on the other hand, are currently eagerly awaiting EU fiscal policy developments expected in the coming week.
Pound (GBP) Exchange Rates Steady as Investors Optimistic for More Gains
While the UK outlook has remained gloomy amid the coronavirus outbreak, the Pound (GBP) has seen fairly strong performance since last week.
Investors have been returning to the British currency due to the boosted liquidity in markets. Stimulus action in the US has improved the global market outlook and made investors more willing to take some risks again.
This has helped the Pound to claw back major ground against major rivals despite poor UK data. UK fiscal stimulus has also helped, but investors still hope for more action from the UK government.
For now, Sterling is being supported more by weakness in rival currencies, as well as market liquidity and market hopes that the Pound will continue to claw higher.
A Reuters poll found that analysts expect the Pound to regain more ground. According to a note from MUFG:
‘The performance in FX markets over the coming months will likely also be driven more by evidence of how policy measures are playing a role in economic recovery. We see the steps taken by the UK government as positive.’
Euro (EUR) Exchange Rates Limp amid Fiscal Uncertainty and Dire Ecostats
For much of the past week, investors have been hesitant to buy the Euro. The shared currency has struggled to benefit from safe haven demand much, as market concerns over the EU’s fiscal policy plans mount.
Some EU nations are pushing for EU-wide fiscal policy, so-called ‘coronabonds’. Other EU nations are objecting however, and these divisions are weighing heavily on the market’s outlooks for the Eurozone and the Euro.
On top of the coronabonds uncertainty, the Euro is being pressured by shockingly poor Eurozone data. Markit’s final March PMIs were published over recent sessions.
Today’s services and composite PMIs were particularly dire. They showed that the Eurozone’s economic activity is already being hit far harder than expected by the coronavirus pandemic.
The PMIs contained multiple figures that represented the worst-ever Eurozone figures seen in the print since they began.
Pound to Euro (GBP/EUR) Exchange Rate Awaits More Fiscal Stimulus
With today’s Eurozone data so dire, Euro investors are now even more eagerly awaiting more fiscal stimulus action from the EU.
EU officials continue to believe that some kind of deal will be reached. There are hopes that some developments will occur by the end of next week.
If there are indeed positive developments regarding ‘coronabonds’ stimulus, the Euro could see a jump in demand next week.
As for the Pound, investors believe there may be more gains ahead for the British currency.
Sterling’s support is limited and is being mostly driven by rival weakness. Its current strength could come to an end if rivals recover.
The Pound to Euro (GBP/EUR) exchange rate outlook could improve further if the UK also ramps up fiscal stimulus however.