Pound to Euro Exchange Rate Slips as Euro Benefits from Coronavirus Jitters
The Pound (GBP) has held much of February’s gains, but the Pound Sterling to Euro (GBP/EUR) exchange rate still saw notable losses last week. This week, market attention is turning once more to the spread of the coronavirus: Covid-19.
After opening last week at the interbank level of 1.20, GBP/EUR spent most of the week sliding and closed the week in the region of 1.19.
So far this week, GBP/EUR has seen limited movement. Investors are hesitant to move too much on either currency without key data to drive movement. Market uncertainty over the spread of coronavirus has led some currencies perceived as safer to strengthen.
Despite concerns that the virus is beginning to spread in Italy, the Euro (EUR) benefitted slightly from the market’s latest demand for safer currencies.
Pound (GBP) Exchange Rates Weighed despite Strong Domestic Data
The Pound (GBP) spent much of last week tumbling back from its strongest levels in months against the Euro (EUR) and other rival currencies.
Sterling was sold amid various factors, both domestic and global.
Concerns that the EU would not give Britain’s financial sector special treatment in upcoming Brexit negotiations weighed on the Pound for most of the week. This prevented the Pound from capitalising on the week’s stronger than expected UK data.
Most of the week’s notable data beat forecasts, but even this was not enough to offset Brexit jitters.
On top of this, the Pound weakened at the end of the week due to revived strength in its rival the Euro (EUR). In the end, investors took profit and sold the Pound from its best levels.
Euro (EUR) Exchange Rates Revived amid Strong PMIs and Rival Weakness
Despite the weekend’s news that the coronavirus was spreading in Italy, the Euro (EUR) continued to see sturdy performance when markets opened today.
Investors are perceiving it as safer than some other major currencies like the Pound (GBP) and Canadian Dollar (CAD). This morning’s stronger German business confidence data is also supporting the Euro.
Towards the end of last week, the Euro received a fresh boost from Eurozone data. Eurozone data had recently been mixed and caused concerns of lasting economic slowdown to linger.
However, Friday’s Eurozone PMI projections for February beat expectations in many key prints.
German manufacturing unexpectedly rebounded to a lighter contraction of 47.8 rather than deepening as forecast. Thanks to this, Eurozone manufacturing recovered slightly to 49.1 and the Eurozone’s overall composite PMI was a stronger than expected 51.9.
The Euro also benefitted from weakness in its rival the US Dollar (USD) at the end of last week.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Major German Data and Virus Developments
Unless there are notable Brexit developments this week, the Pound (GBP) may be driven more by movement in rivals or coronavirus developments. There are few notable UK datasets due for publication in the coming sessions.
This could leave the Pound to Euro (GBP/EUR) exchange rate to be driven by the Euro’s strength.
Key Eurozone datasets will be published across the week. German growth results from Q4 2019 will be published tomorrow. French consumer confidence and a speech from European Central Bank (ECB) President Christine Lagarde will follow on Wednesday.
The Euro is benefitting from market demand for slightly safer currencies today. However, if the coronavirus’ spread across Europe worsens the Euro could come under fresh pressure.
Overall, Eurozone data and potential global developments are likely to drive the Pound to Euro (GBP/EUR) exchange rate this week.