Pound Sterling Euro (GBP/EUR) Exchange Rate Muted Ahead of UK-EU Brexit Talks
The Pound Sterling Euro (GBP/EUR) exchange rate remained flat on Tuesday morning. This left the pairing trading at around €1.1225.
The Pound remained muted against the single currency on Tuesday as investors remained optimistic about a global economic recovery.
Traders moved towards riskier assets despite growing unrest in the United States and concerns over US-China tensions.
The pairing remained flat after another night of protests and threats from President Trump to use troops if necessary. However, this seemed to have little effect on markets.
Meanwhile, in Britain, reports suggest that the government is looking at ways to relax the 14-day quarantine period for people coming from abroad.
Added to this, the next round of Brexit talks between the UK and European Union are due to start today.
The current talks are expected to focus on fisheries, and reports have suggested that the UK and EU are not close to reaching an agreement on some key issues.
However, on Tuesday Sterling made some gains as it is expected Britain will indicate flexibility over fisheries and trade rules. The Times reported this is will happen if the EU agrees to lessen its ‘maximalist’ demands.
Pound (GBP) Muted as British House Prices Tumble by Most in 11-Years
Sterling was left flat against the single currency this morning despite data showing Britain’s house prices plummeted in May.
Nationwide revealed house prices in the UK tumbled by the most in over 11 years as the coronavirus crisis hit the market.
Prices plummeted by -1.7% in May, the largest monthly fall since February 2009. According to Pantheon Macroeconomics’ economist, Samuel Tombs, the fall is likely the start of a slide in house prices over the course of 2020.
He noted:
‘The huge size of the blow from COVID-19 to households’ incomes and the deterioration in consumers’ confidence suggests that house prices must drop. We look for a 5% decline in prices by the end of the third quarter.’
According to Nationwide, the impact of the pandemic on homebuyers is likely to dampen market sentiment.
A survey conducted by Nationwide suggested people had put off moving due to the lockdown. Added to this, potential buyers gave said they are planning to wait around six months on average.
Pound Euro Outlook: PMIs and Unemployment in Focus
Looking ahead, the Euro (EUR) could suffer losses against the Pound (GBP) following the release of May’s Eurozone PMI composite.
If May’s PMI composite shows activity in the Eurozone continues to contract at a fast pace, it will send the single currency lower.
Meanwhile, the bloc’s unemployment could also leave Euro sentiment under pressure.
If April’s unemployment rate jumps higher than expected as the coronavirus pandemic hits the bloc, the Pound Euro (GBP/EUR) exchange rate will edge higher.