GBP/EUR Exchange Rate Falls as Hopes Continue to Grow For Germany’s Economic Levelling
The Pound to Euro (GBP/EUR) exchange rate dipped today, with the pairing currently trading around €1.100.
The Euro (EUR) edged higher against Sterling after the European Central Bank (ECB) held its interest rate at 0%. However, as worries over the Covid-19 pandemic rise, many EUR investors are remaining cautious.
Philip Lane, the ECB’s Chief Economist, recently argued that Europe faces a ‘two step forward, one step back’ road to recovery.
Berenberg economist Florian Hence said:
‘The ECB can hardly relax, its job is far from done. Despite the ongoing recovery, the risks to the outlook remain tilted to the downside, including the risk of a major second wave of the COVID-19 pandemic and harsh, nationwide lockdowns in major European economies.’
Nevertheless, with the interest rates on hold for the foreseeable future, EUR investors have taken some refuge in hopes that Germany’s economy may be levelling out.
Pound (GBP) Falls as UK Unemployment Data Increases Fears of Rising Joblessness
The Pound (GBP) struggled today after unemployment figures revealed that nearly 650,000 people remained unemployment as the coronavirus continues to ravage the British economy.
Nevertheless, the Office for National Statistics (ONS) reported that unemployment stood at 3.9% in May, better than expectations for a 4.2% increase. Nevertheless, many analysts commented that these figures are not showing the full extent of Britain’s unemployment crisis.
Jing Teow, senior economist at PwC, was more upbeat, however:
‘The monthly data paints a more hopeful picture with very early signs of recovery. Actual hours worked on a weekly basis showed signs of increasing in May, while the decline in vacancies and the claimant count saw signs of tailing off in June. This suggests that the reopening of the economy has had a positive impact.’
In UK economic news, Sterling investors will be awaiting this evening’s release of the GfK Consumer Confidence gauge for July. If this shows any sings of improvement, then we could see GBP claw back some of its losses.
GBP/EUR Outlook: Could the Pound Suffer from Rising Fears Over a UK-EU Brexit Deadlock?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the latest Eurozone inflation data. If this improves, then we could see the single currency edge higher on renewed hopes for the bloc’s economic recovery.
Tomorrow will also see the European Union Leaders Special Summit. However, any dovishness about cohesion within the EU – or concerns over its economic performance – could prove EUR-negative.
The GBP/EUR exchange rate will remain sensitive to the UK’s economic situation. As a result, Sterling could suffer from any indications that UK-EU trade talks remain in a deadlock.
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