GBP/EUR Exchange Rate Buoyed as Italy Faces Further Challenges
The Pound to Euro (GBP/EUR) exchange rate is on the rise this morning, amidst concerns that Southern Italy is turning into a powder keg.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1250, up roughly 0.3% from this morning’s opening levels.
Euro (EUR) Subdued as Italy’s Woes Grow
The Euro (EUR) is struggling to find support this morning as concerns over the deteriorating situation in Italy is limiting the appeal of the single currency.
As Italy continues to wrestle with Europe’s largest outbreak of the coronavirus, with over 100,000 confirmed cases and a staggering 11,591 deaths, there are now growing worries about potential social unrest in the south of the country.
Reports reveal Police have already been deployed on the streets of Sicily’s capital, Palermo, amid reports of gangs plotting to attack stores as vital supplies of food and medicine have been disrupted after a ferry service to the island was halted as the provider faces financial difficulties.
Supplies to Sardinia and other Italian islands are at risk after ferry operator Moby suspended some of its services https://t.co/KIZ3YKaXQz
— Bloomberg (@business) March 30, 2020
This unrest is reported spreading throughout the undeveloped south of Italy as the region’s large number of informally employed workers have been hit particularly hard by the coronavirus lockdown.
Stefano Paoloni, a police union leader warns.
‘Many people live day-to-day, doing odd jobs, like unloading trucks at markets, and they are in trouble. We need to be on the alert to see whether there’s organized crime behind social unrest.’
While Prime Minister Giuseppe Conte has funneled funds into the south leaders in the region say this is not enough as they warn the lockdown has brought the region to its knees.
This will be yet another challenge for Conte who is already fighting to keep Italy’s heath system from bursting at the seams and struggling to convince Italy’s EU allies to provide the country with more leniency over its considerable debt pile.
Pound (GBP) Capped by Brexit Concerns
At the same time, the Pound’s (GBP) gains have been capped this morning in the face of renewed concerns over Brexit.
This comes as the UK government remains committed to exiting the Brexit transition period at the end of 2020, despite MEPs urging Boris Johnson to delay his timetable in light of the coronavirus crisis.
The European Parliament’s largest group of MEPs warns that the crisis makes it even more unlikely that a trade deal can be secured by the end of the year.
This will leave the UK facing the double whammy of both the coronavirus and a disruptive exit from the EU, the prospect of which unlikely to inspire much joy in GBP investors.
GBP/EUR Exchange Rate Forecast: More Coronavirus Driven Volatility Ahead?
Looking ahead, it’s safe to assume the ongoing coronavirus crisis will continue to inject fresh volatility into the Pound to Euro (GBP/EUR) exchange rate as the week goes on.
For GBP investors the focus will be on whether the UK’s government feels it necessary to introduce more restrictive measures to help combat the coronavirus, having warned over the weekend it is prepared to step up its response as needed.
Meanwhile in Europe, markets will be hoping to see the that the lockdowns imposed by most EU government are beginning to have a real impact on the spread of the coronavirus. Potentially leading the Euro to weaken if the peak still looks to be some way off.