Pound to Euro Exchange Rate Continues to Tumble despite More Mixed Euro Strength
The Euro’s (EUR) rally slowed last week, but lasting weakness in the Pound (GBP) meant that the Pound to Euro (GBP/EUR) exchange rate kept falling. Sterling continues to be driven by rival strength as the coronavirus Covid-19 dominates global headlines.
GBP/EUR opened last week at the level of 1.1556, and spent the entire week trending lower. Even as the Euro’s rally faded, the Pound continued to weaken on rival strength and GBP/EUR ultimately shed a whopping 5 cents and closed the week at 1.1037.
Movement is more mixed this week so far. GBP/EUR briefly edged higher in rebound before sliding again. The pair currently trends near a low of 1.1008, its worst levels since 6 months since September 2019.
The Euro is once again benefitting from weakness in major rivals like the US Dollar (USD) today. The coronavirus outlook has led to fresh central bank developments over the weekend.
Pound (GBP) Exchange Rates Volatile and Driven by Rival Strength
The Pound’s movement has been limp over the past week. While rising concerns over the coronavirus’ potential impact in Britain is weighing on Sterling, the British currency has been driven largely by rival strength.
Last week, the Euro spent much of the week stronger amid safe haven demand. Then, towards the end of the week, the US Dollar (USD) also rebounded in safe haven demand.
As the Pound had been climbing on a weaker US Dollar (USD) since late-February, the Pound was hit hard by last week’s US Dollar rebound.
Sterling’s appeal remains limited this week. While the British currency is rebounding slightly against some majors and risk-correlated currencies, investors are buying safe havens including the Euro.
Euro (EUR) Exchange Rates Appealing as Safe Haven despite Europe’s Coronavirus Crisis
Investors don’t appear to be buying the Euro in correlation to Europe’s coronavirus issues. Despite the worsening outbreak of the pandemic in major European nations like Italy, Spain and France, the Euro remains one of the market’s most appealing major currencies.
The Euro has been benefitting from safe haven demand amid the outbreak. This is due to being a popular funding currency, as well as weakness in its rival the US Dollar (USD).
The US Dollar (USD) is a currency typically seen as safe. However, surging Federal Reserve interest rate cut news and speculation has left USD tumbling, and EUR benefitting from its losses.
Over the weekend, the Federal Reserve announced yet another emergency US interest rate cut. The second emergency rate cut left the US Dollar slumping once again, and helped the Euro to be one of this week’s most appealing currencies so far.
Pound (GBP/EUR) Exchange Rate Outlook Dominated by Coronavirus
Numerous key UK and Eurozone ecostats are due for publication in the coming week.
Tomorrow, UK job stats and Eurozone economic sentiment data will be published. This will be followed by Eurozone trade and inflation stats on Wednesday.
However, unless the Eurozone’s inflation results are surprising enough to influence European Central Bank (ECB) interest rate cut speculation, these stats will likely be overshadowed.
The pandemic of coronavirus Covid-19 is dominating market attention as it spreads across the globe. Recession fears are rising this week as the number of cases outside China surges.
If the situation notably worsens in Britain or has an impact on the Brexit process, the Pound could come under fresh pressure. Meanwhile, even as cases worsen in Italy the Euro could continue to benefit from safe haven demand and weakness in rivals.
Overall, the Pound to Euro (GBP/EUR) exchange rate is expected to see yet another volatile week on coronavirus developments.
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