GBP/EUR Exchange Rate Rangebound on Brexit Concerns
The Pound to Euro (GBP/EUR) exchange rate is flat this morning as resurfacing Brexit concerns limit movement in the pairing.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1488, virtually unchanged from this morning’s opening levels.
Pound (GBP) Sidelined by Brexit Fears
The Pound (GBP) is mostly rangebound this morning amid renewed concerns of a hard-Brexit.
With just two months to go before the UK’s self-imposed deadline for deciding whether to walk away from talks, Boris Johnson has warned that a deal will not be possible unless the EU is willing to change tack.
This comes shortly after the EU’s Chief Brexit negotiator Michel Barnier suggested that progress in post-Brexit trade talks has so far been ‘disappointing’.
While the coronavirus crisis had delayed talks and severely disrupted both the UK and EU economies, so far the UK government has remained steadfast in its refusal to ask for an extension to the Brexit transition period.
In fact the government seems confident the coronavirus crisis may work in its favour by creating a sense of urgency in the EU
Cabinet Office minister, Michael Gove, said:
‘Coronavirus in some respects should concentrate the minds of EU negotiators in underlining the importance of coming to a conclusion. Whenever a deadline was extended, the light at the end of the tunnel was replaced by more tunnel.’
GBP investors seem less optimistic however, with many fearing the chances of a no-deal Brexit are growing by the day.
Euro (EUR) Steady as Spain and France Prepare to Outline Lockdown Exit Plans
At the same time, the Euro (EUR) is in a holding position this morning as more European countries look to reopen their economies.
Spanish Prime Minister Pedro Sánchez and French President Emmanuel Macron are both due to unveil their plans on easing lockdown restrictions.
Spain and France were two of the countries most heavily hit by the coronavirus, so EUR investors are likely to be encouraged that they are starting to take steps towards reopening their economies.
However it seems that most traders are still erring on the side of caution as while a wider reopening could help to kick start a U-shaped recovery in the Eurozone it also brings the risk of a second, potentially more crippling outbreak of the coronavirus.
GBP/EUR Exchange Rate Forecast: Eurozone GDP in Spotlight
Looking ahead, we are likely to seem some more notable movement in the Pound to Euro (GBP/EUR) exchange rate later in the week with the publication of the Eurozone’s latest GDP figures.
Thursday’s figures are likely to make for some pretty bleak reading, with economists forecasting growth in the bloc will have contracted as much as 3.4% in the first quarter as a result of the coronavirus crisis.
Also influencing the Euro will be the European Central Bank’s (ECB) latest policy meeting, which is also set to conclude on Thursday.
While no policy changes were previously expected from the bank, could we see the ECB surprise with new stimulus measures in an effort to support the Eurozone economy in the absence of a coordinated fiscal package agreed by EU members.
Meanwhile in the UK investors will continue to look to the government to provide any insight into lockdown exit strategy.