GBP/EUR Exchange Rate Rebounds From Three-Month Low on Upbeat Market Mood

The Pound to Euro exchange rate struck higher last week as the increasingly risk-sensitive Sterling was propped up by improving market sentiment.

What’s Been Happening: Pound Shrugs off Brexit Concerns

The Pound initially stumbled last week, striking a three-month low against the Euro in response to renewed Brexit uncertainty as the UK and EU began a month of ‘intensified’ trade talks.

However, Sterling quickly bounced back, with a correction in currency markets at the end of the second quarter benefiting GBP exchange rates.

The Pound then extended these gains in the latter half of the week as positive headlines regarding a possible coronavirus vaccine helped to bolster Sterling sentiment.

The Euro, meanwhile, got off to a solid start last week, rallying on the back of improving Eurozone economic sentiment and stronger-than-expected inflation.

However, the single currency failed to maintain this upward momentum through the remainder of the week, in spite of additional upbeat data releases from the Eurozone.

Three Things to Watch Out for This Week

1. Rishi Sunak’s Summer Statement

At the top of the agenda for GBP investors this week will be Rishi Sunak’s summer statement, in which the Chancellor will update the nation on the state of the UK economy and what steps are being taken to shore up growth.

2. EU Summit

In focus for EUR investors will be a virtual EU summit taking place later in the week, in which its hoped EU leaders will be able to reach some sort of agreement over the coronavirus recovery fund.

3. EC Forecasts

Also influencing the Euro this week will be the latest economic forecasts from the European Commission. Will downward revision to its forecasts for 2020 weigh on the single currency this week?

GBP/EUR Forecast

Looking ahead, with coronavirus jitters on the rise is likely the GBP/EUR exchange rate will be met by fresh volatility this week. Will either the UK or EU be able to convince investors they have a credible plan for dealing with the economic fallout of the outbreak?

Matthew Andrews

Contact Matthew Andrews