GBP/EUR Exchange Rate Rangebound as Eurozone Outlook ‘Tilted to the Downside’
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently fluctuating around €1.101.
The Euro (EUR) suffered as Covid-19 restrictions and curfews across Europe have sparked concerns for the Eurozone’s economic performance throughout the winter months.
Berenberg Bank has also predicted that Europe’s economy could shrink further unless strict measures were put in place to curb the spread of the coronavirus.
The bank said that near-term risks were ‘more tilted to the downside’ for the weeks ahead.
Berenberg Bank said in their statement:
‘As the days are getting shorter and colder, the Eurozone and the UK are reporting record numbers of confirmed SARS-CoV-2 infections and a much slower but still serious rise in medical complications and deaths.
‘If virus trends do not start to stabilise in early November, the Eurozone economy will likely contract in Q4.’
EUR investors are remaining cautious as they expect many European governments to attempt to slow the acceleration of Covid-19. This has sparked fears of further – and possibly new – restrictions.
Pound (GBP) Steady as UK Markets Brace for Brexit Developments
The Pound (GBP) continued to be supported by Brexit optimism. UK markets are more optimistic now the EU Chief Negotiator Michel Barnier has extended his stay in London.
Northern Ireland Secretary Brandon Lewis said that Barnier’s extended stay was ‘hopefully a very good sign’ for a post-Brexit trade deal.
James Brocklebank, writing for The Times, commented on the situation:
‘The Covid-19 pandemic has hit the British economy hard – harder, it would appear, than many other major economies. And the hopes of a trade deal with the EU seem to ebb and flow from week to week.’
In UK economic news, today will see the latest CBI Distributive Trades Survey for October, which is expected to fall to -6.
As a result, we could see the GBP/EUR exchange rate fall as the UK’s economic outlook remains bleak as we begin enter the winter months.
GBP/EUR Forecast: Could No-Deal Brexit Fears Drag Down Sterling?
The Pound (GBP) will be driven by Brexit developments this week. As a result, we could see Sterling edge higher on renewed hopes of a post-Brexit trade deal.
However, we could see the GBP fall if UK-EU trade talks drag on, showing no signs of progress.
Euro (EUR) traders will be awaiting tomorrow’s release of the French Consumer Confidence report for October.
If French consumer morale plummets, then the EUR would suffer as the outlook for the Eurozone’s dims.
The GBP/EUR exchange rate will fluctuate this week on news of progress in Brexit talks. If it looks increasingly like a no-deal Brexit, then Sterling would suffer.
Comments are closed.