GBP/EUR Exchange Rate Falls as Hopes Grow for EU Recovery Fund
The Pound to Euro (GBP/EUR) exchange rate dipped this morning, with the pairing currently fluctuating around €1.09.
The Euro (EUR) edged higher today as traders anticipate that the European Summit discussions — on a proposed €1.68 trillion seven-year budget and coronavirus recovery fund — will be resolved.
Brussels bureau chief Daniel Boffey said that EU leaders were now being challenged to show some unity:
‘Dutch prime Minister Mark Rutte said on Monday EU leaders were making progress but warned discussions could still fall apart. “At times it didn’t look good last night, but I feel that on the whole we are making progress,” Rutte told reporters in Brussels.’
As a result, EUR investors are becoming more hopeful that the Eurozone’s economy could begin to recover from the coronavirus pandemic.
Stephen Innes, an analyst at AxiCorp, believes that the Euro could edge higher if European leaders back a compromise on the recovery fund. Mr Innes said:
‘As for the EU summit, the market seems to prefer that a deal is not rushed through for the sake of appearances An agreement delay – perhaps until later in the summer – is preferable to markets than a weak agreement.’
Pound (GBP) Sinks as UK Retail Sector Struggles Despite Easing Lockdown Restrictions
The Pound (GBP) struggled today despite reports that the UK has signed deals for 90 million doses of Covid-19 vaccine. Business secretary Alok Sharma said the new agreements would ‘ensure the UK has the best chance possible of securing a vaccine that protects those most at risk’.
Nevertheless, Britain’s economic woes have remained in focus today following reports that retail giant Marks & Spencer would cut hundreds of jobs as the coronavirus continues to drag on the retail chain’s sales.
Steve Rowe, the CEO of Marks & Spencer, explains:
‘While some customer habits will return to normal, others have changed for ever. The trend towards digital has been accelerated and changes to the shape of the high street brought forward. Most importantly, working habits have been transformed and we have discovered we can work in a faster, leaner and more effective way.’
Meanwhile, Britain’s housing market has enjoyed a post-lockdown mini-boom owing to July’s stamp duty cut. As a result, house prices have risen to record highs, according to property website Rightmove.
Rightmove said ‘Britain is getting moving again’.
Miles Shipside, a Rightmove director, also added:
‘The unexpected mini-boom continues to gather momentum as more nations reopen.’
‘The busy-until-interrupted spring market has now picked up where it left off and has been accelerated by both time-limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.’
GBP/EUR Outlook: UK Public Sector Borrowing Figures in Focus
Pound (GBP) traders will be looking ahead to tomorrow’s publication of the latest UK Public Sector Net Borrowing figure for June. Any signs of improvement in Britain’s economy would prove GBP-positive.
Euro (EUR) investors will be paying close attention to the European Central Bank’s Vice-President, Luis De Guindos, who is due to deliver a speech tomorrow. If he is notably dovish about the Eurozone’s economy, then we could see the single currency stuffer.
The GBP/EUR exchange rate will remain sensitive to Brexit developments this week. Any signs that UK-EU trade talks could remain in a deadlock would drag down Sterling.