GBP/EUR Exchange Rate Rangebound as Covid-19 Freezes UK House Prices
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently fluctuating around €1.10.
Sterling held steady following this morning’s release of the Halifax House Prices figure for June. This managed to beat forecasts but remained in negative territory at -0.1%.
As a result, GBP investors are becoming concerned for the British economy’s recovery, with house prices down by 0.9% than in the first quarter of 2020.
Russell Galley, the managing director at Halifax, was downbeat in his assessment, saying that prices could keep dipping:
‘The near-term outlook points to a continuation of the recent modest downward trend in prices through the third quarter of the year.’
The GBP/EUR exchange rate remained unmoved, however, as the housing market was frozen over the Covid-19 lockdown.
Meanwhile, Sterling traders will be looking ahead to further signs that the UK economy is on the recovery now that the economy slowly reopens.
Brexit continues to remain on the agenda after Prime Minister Boris Johnson’s spokesman said that the UK still wants to see if progress can be made in UK-EU negotiations. As a result, this has buoyed hopes that the two powers could secure a free trade deal by the end of the year.
Euro (EUR) Steady as the European Commission is Dovish About the Eurozone’s Economic Recovery
The Euro (EUR) struggled to gain after the release of the German industrial production data for May. Although the figure improved from -17.5% to 7.8%, this wasn’t enough to buoy confidence in the Eurozone’s largest economy.
However, some investors noted that German factory had revived, with a surge in production of heavy-duty goods. Nevertheless, with the economy set to face further hurdles in the months ahead, this left the EUR/GBP exchange rate flat this morning.
The European Commission (EC) were also dovish about the Eurozone’s economic recovery. The EC stated the slow reopening of the economy as a factor due to drag down the Euro. The EC commented:
‘Because the lifting of lockdown measures is proceeding at a more gradual pace than assumed in our Spring Forecast, the impact on economic activity in 2020 will be more significant than anticipated.’
Investors have continued to flock to risky assets, leaving safe-haven currencies like the Euro and US Dollar behind. Markets are becoming more optimistic about the global economy.
GBP/EUR Forecast: Could the Euro Sink on a Grim Economic Forecast for the Eurozone?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the European Commission’s economic growth forecasts. Any dovish predictions for the Eurozone would prove EUR-negative.
Tomorrow will also see a speech by Luis De Guindos, the Vice President of the European Central Bank (ECB). Again, any dovishness from the Eurozone’s central bank could drag down the single currency.
Sterling investors will be keeping a close eye on the release of June’s RICS Housing Price Balance figure for June. If the data beats forecasts, then we could see the GBP/EUR exchange rate edge higher.