GBP/EUR Exchange Rate Edges Higher as Eurozone Fails to Find Financial Consensus
The Pound to Euro (GBP/EUR) exchange rate saw an uptick of 0.1% today, with the pairing currently trading around €1.14.
The Euro (EUR) continued to struggle today after the Eurozone failed to cohere on a unified fiscal response to the bloc’s coronavirus crisis.
The Eurozone’s finance ministers struggled to find a consensus between the poorer southern European states hit by Covid-19 and northerly nations like Germany and the Netherlands.
Marchel Alexandrovich, the Senior European Economist at the investment bank Jefferies International, commented:
‘It is disappointing, but not altogether surprising, that European finance ministers are struggling to agree on a fiscal package to support the euro area economy through this crisis.’
‘Ultimately, the bulk of the burden of costs related to the pandemic will remain with the national governments and the standoff on common debt issuance and pooling of risk between the richer and poorer euro area countries is seemingly no closer to being resolved.’
Meanwhile, Euro found little support from Germany’s Trade Balance report which showed an increase in exports in February.
However, with the Eurozone’s largest economy set to get worse before it gets better, single currency traders are remaining cautious.
GBP/EUR Exchange Rate Increases as Boris Johnson’s Health Improves
The Pound (GBP) managed to gain on the Euro (EUR) after it was revealed by Chancellor Rishi Sunak that Prime Minister Boris Johnson’s condition had improved in intensive care. The PM is now ‘engaging positively’ with the clinical team at St Thomas’ Hospital.
However, with the UK’s nationwide lockdown likely to be extended some of the Pound’s gains were clipped.
Moreover, businesses face yet more uncertainty as the nation continues to tackle its coronavirus epidemic.
Sadiq Khan, the Mayor of London, said that an extended lockdown was highly likely, commenting:
‘I think when the prime minister announced the lockdown just over two and half weeks ago, he said he would review it in three weeks’ time, which is this Monday. I think we’re nowhere near lifting the lockdown.’
Today also saw the release of the UK manufacturing and industrial production reports for February.
Industrial production fell by -2.8% leaving many Sterling investors concerned for March’s report. Last month’s figures are likely to be dragged down by the nation’s outbreak of coronavirus and the subsequent lockdown.
Frances O’Grady, the General Secretary of the trade union body TUC, commented:
‘Even before the coronavirus crisis hit, our economy needed a change of direction.’
‘While the priority now is to contain the spread of the virus, today’s figures highlight the need for a robust recovery strategy. We must tackle longstanding economic inequalities, not reinforce them.’
GBP/EUR Forecast: Sterling Could Rise on Boris Johnson’s Recovery
Euro (EUR) investors will be keeping a close eye on the Eurozone’s fiscal developments into next week. If the bloc manages to formulate a joint response to debt – which includes countries heavily hit by the coronavirus such as Italy and Spain – we would see the single currency rise.
The GBP/EUR exchange rate will continue to be driven by news of Prime Minister Boris Johnson’s health into next week, however. Any indications that the PM could return to normal duties in the near-term would boost the Pound as the nation’s political stability returns.