Pound to Euro Exchange Rate Calm as Markets Anticipate Further News
As the Euro (EUR) capitalises on the market’s coronavirus panic, the Pound Sterling to Euro (GBP/EUR) exchange rate has been dragged lower and lower. Sterling (GBP) movement steadied today as investors await tomorrow’s UK budget.
Last week’s mixed movement saw GBP/EUR dip. Ultimately the pair ended the week over half a cent lower, in the region of 1.15.
Since markets opened yesterday, GBP/EUR has once again trended with a downside bias. GBP/EUR briefly touched its lowest levels since October yesterday. At the time of writing, the pair continued to trend in the interbank region of 1.14.
The coming sessions are likely to be highly influential for the Pound and Euro. Britain’s spring budget tomorrow has been highly anticipated. Meanwhile, the European Central Bank (ECB) policy decision on Thursday could be especially influential for Euro traders.
Pound (GBP) Exchange Rates Calmer Ahead of UK Budget Presentation
The Pound (GBP) has seen highly mixed movement, in reaction to this week’s market panic over coronavirus Covid-19. As the virus outbreak worsens across the globe and major economies consider lockdowns, fears of its impact on the global economy have hit many currencies.
The Pound has been unable to hold against a rocketing Euro (EUR). However, it has been gaining against other majors.
As the Bank of England (BoE) is perceived as having less room to move on monetary policy, further policy loosening is being perceived as making Britain’s economic rebound more likely. This is supporting the Pound outlook slightly.
Investors will be even more hopeful for UK economic resilience if the government announces fiscal stimulus during tomorrow’s anticipated budget presentation. According to Tej Parikh, Chief Economist at the Institute of Directors (IoD):
‘Government must be at the ready to take swift action to help cash-strapped businesses bridge this challenging period. The upcoming budget also provides an opportune moment to lower business costs and support investment to amplify the post-outbreak recovery.’
Euro (EUR) Exchange Rates Dip after Days-Long Rallying
The Euro (EUR) has been among the market’s most appealing currencies, during the escalation of the coronavirus outbreak.
Currencies like the US Dollar (USD) plummet from coronavirus fears and rising central bank rate cut bets. As a result, the Euro has been capitalising.
The Euro is popular as a funding currency. This is part of why it has been correlated more with safe havens like the Japanese Yen (JPY) and Swiss Franc (CHF) lately.
For much of the past week, the Euro has been strong despite Italy being one of the countries hardest-hit by Covid-19. Last night’s news that the entire nation would be put on lockdown likely played a part in the Euro falling from highs today.
For now, investors may continue sell the Euro from its best levels and movements could steady in anticipation of the European Central Bank (ECB) policy decision later this week.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Budget and Central Bank News
Tomorrow sees the publication of all of this week’s most notable UK ecostats. However, Pound to Euro (GBP/EUR) investors may brush over much of them.
Data from January is likely to be heavily overshadowed by events from government and central bank officials. This is due to the market’s focus on coronavirus developments.
Tomorrow’s UK growth and production stats may not be heavily influential. Instead, markets will focus on the day’s government budget presentation.
Speculation has surged over the past week that the government will be pressured to offer notable fiscal stimulus. Such policy could boost economic activity and protect from the potential impact of the coronavirus outbreak.
For similar reasons, investors may overlook upcoming Eurozone data. Instead, attention will be focused on Thursday’s upcoming European Central Bank (ECB) policy decision.
If the ECB takes a more dovish than expected tone on Covid-19 and the Eurozone economy, the Euro could lose much of its recent appeal and weaken.
On the other hand, if the ECB remains fairly confident in its current policy, the Pound to Euro (GBP/EUR) exchange rate could be in for deeper losses.