GBP/EUR Exchange Rate Steady as Hopes Grow for UK V-Shaped Recovery
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently fluctuating around €1.110.
Sterling edged higher today following the release of the latest UK CPI figure for July, which beat forecasts and rose from 0.6% to 1% in July year-on-year.
Jeremy Thomson-Cook, Chief Economist at Equals Money, commented on the data:
‘Inflation is showing signs of a v-shaped recovery – not what consumers need at all – following an increase to 1% in July compared to this time last year. The rise was underpinned by increases in clothing prices as well as furniture and transport costs with gains also seen in culture and recreation and health. Consumers evidently had a pent up demand for summer clothes, haircuts and road trips to the beach.’
However, with hopes of a v-shaped recovery for the British economy, today’s UK inflation data has buoyed confidence in the nation’s ability to recover its economy from the Covid-19 crisis.
Meanwhile, Downing Street has reiterated its hope to secure an EU trade deal in September. Consequently, this has buoyed Sterling on growing confidence in a post-Brexit trade deal.
Euro (EUR) Steady Despite Growing Optimism for German Economy
The Euro (EUR) held steady today single currency investors awaiting the seventh round of UK-EU Brexit talks between the EU’s Chief Negotiator, Michel Barnier, and his UK counterpart David Frost.
However, EUR is continuing to struggle from growing fears over the Eurozone’s economy after the bloc’s GDP suffered a record contraction in the second quarter.
Nevertheless, Bundesbank was optimistic that the Eurozone’s largest economy, Germany, was set for a rebound in the months ahead.
Bundesbank commented:
‘The clear and broad-based recovery in macroeconomic performance, which began after the low point in April, will continue.’
‘The German economy should grow very strongly in the summer quarter of 2020.’
In Eurozone economic news, today will see the release of July’s Consumer Price Index for July. Any improvement in the bloc’s economic recovery would prove EUR-positive.
GBP/EUR Forecast: Could Weak UK Consumer Confidence Drag Down Sterling?
Euro (EUR) investors will be looking ahead to tomorrow’s release of Germany’s PPI figure for July. If this shows any marked improvement for the Eurozone’s largest economy, then we could see the single currency rise.
Tomorrow will also see the European Central Bank’s (ECB) monetary policy meeting accounts. Any dovishness, however, could clip the Euro’s gains.
The GBP/EUR exchange rate could struggle tomorrow, however, if the UK GfK consumer confidence gauge for August undershoots forecasts.