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Pound Sterling to Euro Exchange Rate Outlook Gloomy as ‘Second Wave’ Fears Intensify

Pound to Euro Exchange Rate Knocked by ‘Second Wave’ Fears

Updated 16:35 BST 24/06/2020:

The Pound to Euro (GBP/EUR) exchange rate has been jittery all day. This afternoon, GBP/EUR is once again falling back from an advance attempt.

At the time of writing, GBP/EUR is trending in the region of 1.1032. Sterling (GBP) has been hit lower by market anxiety that there will be a ‘second wave’ of coronavirus infections.

Markets increasingly perceive Sterling as a risk-correlated currency.

Global trade tensions are flaring up alongside coronavirus concerns today as well. As fears of a US-Europe trade war rise, investors are even more hesitant to take risks and buy the Pound.

(Published 11:17 BST 24/06/2020)

Pound to Euro Exchange Rate Struggles to Recover as Euro Remains Solid 

The Pound Sterling to Euro (GBP/EUR) exchange rate has been trending near lows lately. However, while Sterling (GBP) is avoiding deeper losses, the pair is struggling to sustain much of a recovery either. 

Last week saw GBP/EUR continue to tumble. GBP/EUR opened last week at the level of 1.1140, and slipped almost a cent to close the week at the level of 1.1047. 

This week, GBP/EUR briefly dipped to a low of 1.0962. This was the worst level for the pair in almost a quarter, since late-March. 

While GBP/EUR has attempted to recover since then, the pair continues to see mixed demand. GBP/EUR is trending in the region of 1.1080 at the time of writing. 

Concerns over the coronavirus pandemic and Brexit are limiting the Pound’s potential to advance. 

Pound (GBP) Exchange Rates Struggle amid Jittery Market Sentiment 

The Pound continues to see highly mixed movement this week. Market uncertainty on risk and trade-sentiment are also keeping the British currency unappealing

There have been almost rapid market shifts between risk-on and risk-off movement. 

Some signs that the global economy is recovering from the coronavirus pandemic are keeping risk-correlated assets appealing in some ways. On the other hand though, fears of a ‘second wave’ of coronavirus infections are making risks unappealing. 

This is notable because many analysts believe the Pound is increasingly becoming a risk-correlated currency. 

According to Kathleen Brooks from Minerva Analysis: 

‘We’ve really seen a lot more volatility in the pound than we have in the other major currencies such as the US Dollar, the Japanese Yen, the Euro even, and the Swiss Franc.’ 

Euro (EUR) Exchange Rates Lack Drive as Markets Look for Safer Assets 

Recent Eurozone data continues to beat forecasts, and markets are fairly optimistic about the Eurozone’s economic resilience amid the coronavirus pandemic. 

Despite this though, the Euro is struggling to push much higher. 

Investors have had little reason to keep buying the Euro higher after weeks of strong performance. Rising demand for currencies more correlated to safe haven demand, like its rival the US Dollar (USD), are also benefitting more due to rising fears of a ‘second wave’ of coronavirus infections. 

Fresh signs of trade tensions between the US and EU are also weighing on the Euro today. 

Pound to Euro (GBP/EUR) Exchange Rate Outlook to Remain Jittery While Coronavirus Uncertainties Intensify 

Investors remain hesitant to buy the Pound. Coronavirus and Brexit uncertainties look likely to dominate the British currency’s outlook. 

The Euro, on the other hand, may be influenced by data in the coming days if it is surprising enough to investors. 

Thursday’s session will see the publication of German consumer confidence data, while French consumer confidence stats will be published on Friday. 

Comments from European Central Bank (ECB) officials may of course influence the Euro tomorrow as well. 

Looking ahead though, developments over the ‘second wave’ of coronavirus infections are likely to remain a big focus for the Pound to Euro (GBP/EUR) exchange rate overall.