Pound to Euro Exchange Rate Edges Higher as EU Secures €750 Billion Covid-19 Recovery Package
The Pound to Euro (GBP/EUR) exchange rate edged higher today, with the pairing currently trading around €1.108.
The Euro (EUR) struggled today after global markets were uplifted after EU leaders signed off a €750 billion package to help rebuild the Eurozone’s economies from the Covid-19 crisis.
As a result, investors have sought out riskier assets as hopes grow for the global economy.
European Commission president Charles Michel said:
‘This is a good deal, a strong deal, the right deal for Europeans now. I believe this will be seen as a pivotal moment on Europe’s journey.’
Today also saw hopes of a Covid-19 vaccine increase after AstraZeneca and Pfizer reported positive results from early human trials. Consequently, this has bolstered risk-sentiment and has weighed on safe-haven currencies like the Euro and the US Dollar today.
Stephen Innes of AxiCorp comments:
‘Risk assets are moving to the vaccine pump’s beat after it was raining positive vaccine trials overnight, and investors are still dancing in that rain.’
‘The worsening outlook on the virus front continues to churn in the background. But the fear of the virus is less than it was, so the economic beat down is expected to be less this time around.’
Pound (GBP) Edges Higher as Hopes Grow for the UK’s V-Shaped Recovery
The Pound (GBP) rose against the Euro (EUR) today despite UK Public Sector Borrowing for June soaring to a quarterly record to offset the Covid-19 crisis.
Chancellor Rishi Sunak commented:
‘I am also clear that over the medium term we must, and we will, put our public finances back on a sustainable footing.’
Jeremy Thomson-Cook, the chief economist at financial services firm Equals, was more pessimistic, however:
‘The UK economy continues to burn, and the government’s spending taps need to remain open for the foreseeable future in order to give businesses and consumers every opportunity to support each other as we gradually return to normality.’
Meanwhile, GBP investors are becoming more hopeful after the Bank of England’s (BoE) Chief Economist, Andy Haldane, has continued to insist that Britain is enjoying a ‘V-shaped’ recovery.
Consequently, the Pound to Euro exchange rate has headed higher on reassurances that the UK economy could be on the road to recovery.
Pound to Euro (GBP/EUR) Forecast: Could Covid-19 Vaccine Hopes Weigh on Safe-Haven Demand?
Euro (EUR) investors will be looking ahead to tomorrow’s speech from the European Central Bank’s (ECB) Vice President, Luis De Guindos. Any dovishness about the Eurozone’s economy would prove EUR-negative.
Meanwhile, the Pound (GBP) will continue to be driven by speculation over Brexit. If UK-EU trade talks show any signs of progress, then we could see Sterling rise on hopes of a trade deal post-Brexit.
The Pound to Euro exchange rate could continue to edge higher if risk-sentiment improves. As a result, the Euro (EUR) could suffer on news of more positive trials of a Covid-19 vaccine.