Pound to Euro Exchange Rate Exchange Rate Remains Unappealing amid Euro Strength
Gloomy clouds continue to cast over the Pound Sterling to Euro (GBP/EUR) exchange rate outlook. Investors continue to buy the Euro (EUR) amid optimism over the Eurozone outlook, while Britain’s coronavirus and Brexit fears weigh on Sterling.
Despite a solid advance attempt last week, the Euro’s persistent strength eventually pushed GBP/EUR back. GBP/EUR opened the week at the level of 1.0999, and though it briefly reached above the level of 1.11 it quickly tumbled again.
GBP/EUR ultimately ended the week even lower, in the region of 1.0977. What’s more, GBP/EUR touched on a new July worst of 1.0946 soon after markets opened today.
This week will be quieter for UK news. However, upcoming Eurozone data could influence the Pound to Euro (GBP/EUR) exchange rate outlook.
Pound (GBP) Exchange Rates Floundering amid Lack of Fresh Support
Last week’s Pound (GBP) movement was highly mixed. In the middle of the week, the British currency was knocked lower by fears that the UK government could walk away from UK-EU Brexit negotiations without a deal.
Towards the end of the week the Pound did find a boost in the latest UK retail and PMI data, but this was still limited.
The Pound outlook remains filled with uncertainty as the coronavirus pandemic takes a toll on the economy and Brexit negotiations see no progress. As a result, the currency is is being driven more by rival movement today.
Sterling is gaining against a weaker US Dollar (USD). However, as the Euro remains appealing GBP/EUR is being kept under pressure.
Euro (EUR) Exchange Rates Resilient amid Eurozone Recovery Hopes
Investors continue to buy the Euro amid hopes that the Eurozone economy is weathering the coronavirus pandemic better than other major economies.
Last week saw EU leaders surprise markets by reaching an agreement on an EU Recovery Fund quicker than expected. While some said the deal did not go far enough, it was overall a plus for the Eurozone outlook.
Eurozone data also continues to show more resilience than other economic data. Against its biggest rival the US Dollar (USD) the Euro is especially resilient. This is because the US economic outlook is comparatively concerning for markets.
Still, despite the Eurozone’s relative optimism, economists don’t expect growth in the bloc to return to normal for some time. According to European Central Bank (ECB) Executive Board Member Fabio Panetta:
‘On the basis of our projections, we won’t see a return to those levels before the end of 2022.’
Pound to Euro (GBP/EUR) Exchange Rate Outlook Could Rebound on Poor Eurozone Data
The Pound to Euro exchange rate remains unappealing overall. Britain’s coronavirus and Brexit outlooks remain gloomy, while the Eurozone outlook is comparatively more positive than some other major economies.
These factors are likely to keep pressure on GBP/EUR overall. In fact, if upcoming key Eurozone data beats forecasts the pair could be in for even further losses despite the Euro rally slowing recently.
On the other hand though, poor upcoming Eurozone data could give the pair reason to rebound.
Key Eurozone data due for publication later in the week includes German, French and Eurozone growth rate results. Eurozone unemployment and inflation, as well as German retail sales, will also be published.
If this slew of notable stats shows surprising weakness, investors may be more hesitant to hold onto the resilient Euro. This would be the most likely cause of a Pound to Euro (GBP/EUR) exchange rate recovery this week.
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