GBP/EUR Exchange Rate Edges Higher as Hopes Grow for Britain’s Economic Recovery
The Pound to Euro (GBP/EUR) exchange rate rose by 0.2% today, with the pairing currently trading around €1.09.
Sterling rose today after the UK CBI Distributive Trades Survey figure for July beat forecasts and rose from -37% to 4%. As a result, GBP investors have become more optimistic about Britain’s economic outlook.
CBI chief economist Rain Newton-Smith commented on today’s data:
‘It’s great to see retail sales stabilise this month, but this doesn’t tell the whole story. This crisis has created winners and losers within the retail sector and for some businesses the picture remains bleak.
‘The re-opening of non-essential retail was a vital step towards recovery but isn’t a cure-all. The government has provided critical support for firms and jobs throughout the crisis. But ongoing financial pressures are a major challenge for some retailers, and additional direct support to shore up cash flow, such as extension of business rates relief, should be considered.’
However, after Prime Minister Boris Johnson warned of early signs of a possible second wave of the coronavirus in Europe, GBP investors have remained cautious. Any signs that the UK could also be impacted by a rising number of Covid-19 cases would prove GBP-negative.
Euro (EUR) Sinks as Covid-19 Vaccine Hopes Dampen Safe-Haven Demand for the Single Currency
The Euro (EUR) suffered today after growing hopes for a Covid-19 vaccine have boosted risk-sentiment and demand for riskier assets. Consequently, the single currency has suffered a sell-off of safe-haven currencies.
Moderna, a US-based biotech firm, has begun its first late-stage trials of its experimental coronavirus vaccine, boosting hopes that the global economy could recover if the vaccine is released earlier-than-expected.
Josh Mahony at IG said:
‘As Moderna heads into the third phase of their vaccine trial, it does feel as if we are entering the final stretch of a historic push for a solution to this pandemic.
‘While markets have been burnt by heavily manipulated announcements from pharma firms working on treatments and vaccines, the fact is that we have multiple routes to success, as Pfizer, AstraZeneca, and Moderna all push to get their vaccines across the line.’
GBP/EUR Outlook: Could Weak German GDP Data Weigh Down the Euro on Thursday?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the latest UK Mortgage Approvals for June. Any improvement in the UK’s economy would further buoy Sterling.
Meanwhile, EUR investors will be looking ahead to Thursday’s release of the flash German GDP figures for the second quarter. If these confirm forecasts and fall by -9% month-on-month, then we could see the single currency suffer.