GBP/EUR Exchange Rate Falls as Single Currency Investors Brace for Europe’s Two-Day Summit
The Pound to Euro (GBP/EUR) exchange rate dipped by -0.2% this morning, with the pairing currently trading around €1.100.
The Euro (EUR) edged higher today as investors watch Brussels as Europe’s two-day summit over a €750 billion recovery fund enters its first session. As a result, markets have become more optimistic that the Eurozone’s economy could be offered a lifeline.
Adam Cole of RBC Capital Markets commented:
‘We are optimistic that an agreement on the European Recovery Fund can be reached. However, recently Hungarian PM Viktor Orban said negotiations will be “very tough” and will likely need to continue throughout the summer.’
French President Emmanuel Macron was also cautious, saying:
‘We will do everything we can to find an agreement.’
With Europe facing its worst recession in decades, any signs that the European summit could end in failure would prove EUR-negative.
In Eurozone economic news, today saw the release of the latest Consumer Price Index for June, which edged higher from -0.1% to 0.3%.
Pound (GBP) Sinks as UK Unemployment is Expected to Get Worse
The Pound (GBP) continued to struggle today after yesterday’s stronger-than-expected jobless figures masked the reality of an impending unemployment crisis in the months ahead. As a result, GBP investors have become increasingly concerned for Britain’s economic recovery.
Resolution Foundation chief economist Mike Brewer commented on yesterday’s data:
‘Britain is in the midst of an unprecedented economic shock that is profoundly affecting millions of people’s jobs.’
‘Unemployment is forecast to hit 4 million for the first time ever. And yet our official data is failing to show the true extent of this jobs crisis.’
Meanwhile, GBP investors have switched their attention back to Brexit. However, with still no signs of progress in UK-EU trade talks, Pound investors are becoming nervous of a possible no-deal exit in December.
UK and Scottish governments have since clashed over how powers will eb shared out post-Brexit. As a result, the GBP/EUR exchange rate is under pressure as tensions begin to grow both domestically and with the European Union.
GBP/EUR Outlook: Could a UK-EU Brexit Consensus Buoy the Pound Next Week?
Euro (EUR) investors will be looking ahead to Monday’s release of Germany’s PPI figure for June. However, with the figure expected to remain in negative territory, we could see the single currency shed some of its gains.
Sterling traders will be awaiting Tuesday’s release of the UK’s Public Sector Net Borrowing report for June. If the UK’s economic situation shows any sings of improvement, then we could see the Pound (GBP) rise.
The GBP/EUR exchange rate will be dictated by Brexit developments next week. If there’s any signs of a post-Brexit trade consensus, then we would see the Pound rise.