The Pound to Euro (GBP/EUR) exchange rate made some steady gains last week, as Europe’s coronavirus resurgence spooked investors.
Last Week: Euro Undermined by Spike in European Coronavirus Cases
The Euro found itself on the back foot against the Pound through most of last week, as Europe’s coronavirus resurgence stoked concerns that the Eurozone’s economic recovery could already be stalling.
This was highlighted by warnings from the World Health Organisation’s (WTO) European Chief, Dr Hans Kluge as well as moves by Germany and France to start introducing some new coronavirus restrictions.
The Pound, meanwhile, got off to a slow start last amidst linger Brexit jitters.
However, Sterling sentiment began to rapidly improve after Downing Street dismissed rumours that Boris Johnson would step down as Prime Minister within six months.
The Pound then maintained this upward trajectory through the latter half of the week, in spite of some dovish comments from Bank of England (BoE) governor Andrew Bailey at the Federal Reserve’s Jackson Hole Symposium.
Three Things to Watch out for This Week
- Eurozone Inflation
A key focus for EUR investors this week will be the Eurozone’s CPI release, as another slowing of inflation is likely to further fuel concerns that the bloc’s economic recovery is faltering.
- German Factory Orders
Also of note for EUR investors will be the latest industrial data coming from Germany. Will Europe’s largest economy be able to maintain its momentum in the factory sector?
- UK Redundancies
In the UK, GBP investors will be bracing for a wave of redundancies following changes to the government’s furlough scheme. Expect this to weigh on the Pound if there is an alarming rise in jobs losses.
GBP/EUR Outlook
The GBP/EUR exchange rate looks to be met by volatility this week as Europe’s coronavirus woes continue and the UK approaches an unemployment crisis.