GBP/EUR Exchange Rate Buoyed by European Coronavirus Concerns
The Pound to Euro (GBP/EUR) exchange rate has edged higher in early trade this morning, amidst renewed concern over Europe’s coronavirus resurgence.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1243, up roughly 0.3% from this morning’s opening rate.
Coronavirus Concerns Continue to Drag on the Euro (EUR), Markets Look to Lagarde for Fresh Impetus
The Euro (EUR) remains on the back foot this morning, as Europe’s ongoing struggle against the second wave of the coronavirus weighs heavily on EUR sentiment.
Following on from yesterday’s gloomy ZEW surveys from Germany, which reported economic sentiment plunged to a six-month low in November, the mood in the Eurozone appears to be growing increasingly dark.
The latest headlines suggest that Italy could be set to follow many of its European neighbours into a national lockdown, as the epicenter of Europe’s initial outbreak struggles to contain a resurgence in cases.
This in turn has reignited concerns over the Eurozone’s economic outlook, with most analysts forecasting the bloc will face a double-dip recession this winter, as a result of the various restrictions and lockdown measures in place across the continent.
As such, the recent announcement from US pharmaceutical giant Pfizer, that its experimental vaccine has shown 90% effectiveness in preliminary analysis has offered a ray of hope to EUR investors.
However, traders seem to be tempering their optimism ahead of a speech by European Central Bank (ECB) President Christine Lagarde later this afternoon.
Lagarde may comment on the vaccine, but it’s unlikely the development will alter her outlook for the Eurozone economy in any notable way, or impact her plans to expand the ECB’s stimulus programme.
Pound’s (GBP) Gains Trimmed as Brexit Deadline Likely to Be Missed
At the same time, the Pound (GBP) has trimmed some of its initial gains this morning, following the news that the UK and EU will miss the mid-November deadline for reaching a trade deal, but that one could be presented next week.
Sources on both sides of negotiations have reportedly told Reuters that the current deadlock is unlikely to be broken this week, despite some progress.
However, one EU diplomat has claimed that the ‘the real cut-off point is late next week’ following a meeting of EU ambassadors on 18 November.
Should the two sides manage to reach an agreement then we should expect the Pound to appreciate sharply.
Comments are closed.