GBP/EUR Exchange Rate Rises Despite French Consumer Confidence Buoying Optimism Eurozone Economy
The Pound to Euro (GBP/EUR) exchange rate edged higher this morning, with the pairing currently trading around €1.112.
The Euro (EUR) struggled today as Europe’s resurgence of Covid-19 cases has capped gains for the single currency.
In Eurozone economic news, today saw the release of the French consumer confidence report for August, which held steady at 94. As a result, EUR investors have become more optimistic about the Eurozone’s second-biggest economy’s recovery.
Analysts at Reuters were upbeat about the data, saying:
‘Households’ concerns about unemployment fell to their lowest level since April when France was still in a two-month coronavirus lockdown that ended May 11.
‘France has avoided a major spike in permanent unemployment as companies put workers on state-subsidised furloughs en masse.’
Euro (EUR) investors will also be awaiting today’s speech from the European Central Bank’s (ECB) Isabel Schnabel, a member of the bank’s executive board. Any signs of bullishness from the ECB would prove EUR-positive.
Pound (GBP) Edges Higher as Investors Shrug Off No-Deal Brexit Fears
The Pound (GBP) edged higher today as investors continue to brush off fears of a possible no-deal Brexit on 31st December. Instead GBP has benefited from a surge in positive risk-sentiment on hopes of progress in US-China trade talks.
Meanwhile, confidence has returned in a possible Covid-19 vaccine, buoying demand for Sterling as the global economic outlook improves.
Valentin Marinov, the head of currency strategy at Credit Agricole, explains:
‘The Pound strength correlates well with the improvement in risk sentiment overnight. This, in turn, seemed to reflect some positive news regarding the US-China trade deal as well as hopes for a Covid-19 vaccine.’
Sterling investors will be looking ahead to today’s speech from Andrew Haldane, the Bank of England’s (BoE) Chief Economist. However, if he is notably dovish in his statement, we could see GBP suffer.
GBP/EUR Forecast: Could a Dovish BoE Drag Down Sterling This Week?
The Pound (GBP) will remain sensitive to Brexit developments this week. As a result, we could see GBP suffer from growing fears over a possible no-deal Brexit in December.
Euro (EUR) investors will also be looking ahead to tomorrow’s speech from Philip Lane, a member of the ECB’s Executive Board. Again, if the ECB hints at an improvement in the Eurozone’s economy, we could see the single currency rise.
The GBP/EUR exchange rate could suffer at the end of this week if the Bank of England’s (BoE) Governor, Andrew Bailey, takes a dovish approach to the British economy.