Pound to Euro Exchange Rate Trending Higher Before Markets Closed
Despite concerns about Britain’s unemployment risk and the British coronavirus outlook, the Pound Sterling to Euro (GBP/EUR) exchange rate is trending higher at the end of the week. Investors are hesitant to buy the Euro (EUR) much as Eurozone coronavirus fears also worsen.
Since opening this week at the interbank level of 1.09, GBP/EUR has seen relatively narrow and volatile movement as both the Pound (GBP) and Euro weaken.
GBP/EUR is trending higher at the end of the week though. At the time of writing, GBP/EUR is trending almost half a cent above the week’s opening levels.
Key UK and Eurozone data has potential to influence the Pound to Euro exchange rate next week. However, coronavirus and Brexit developments are still most likely to cause bigger movements.
Pound (GBP) Exchange Rates Up as UK Borrowing Far Lower than Thought
Today’s UK data has been mixed. UK consumer confidence was slightly better than expected at –25, but public borrowing came in with a deeper than forecast £-35.9b.
🇬🇧Cumulative borrowing in the UK this fiscal year is significantly higher than last year pic.twitter.com/z33MZoFQfY
— Danske Bank Research (@Danske_Research) September 25, 2020
However, what impressed markets was news that the July borrowing figure had been significantly revised. The July figure, previously reported at £-25.9b, has been revised to £-15.4b.
The Pound (GBP) found a little relief in the report.
It follows yesterday’s session, where the Pound saw mixed movement in reaction to the latest efforts from the UK Treasury to support UK jobs amid the coronavirus pandemic.
Euro (EUR) Exchange Rate Sees Most Bearish Week in Months
While the Pound’s (GBP) strength was limited, it has been able to advance against a weaker Euro (EUR) this week. Investors are selling the shared currency amid speculation that the Eurozone’s own coronavirus situation is worsening.
On top of this, investors are finding the Euro unappealing due to a resurgence of demand for its biggest rival, the US Dollar (USD).
German business confidence data was underwhelming and fresh comments from European Central Bank (ECB) Governor Council Member Francois Villeory de Galhau also weighed on the Euro.
Villeroy said that the bank had ample space to take action on Eurozone monetary policy. The remarks were seen as dovish.
Pound to Euro (GBP/EUR) Exchange Rate Remains Sensitive to Coronavirus Developments
Next week’s UK and Eurozone economic calendars will be busier, with key influential data due throughout the week. However, the global coronavirus situation is more likely to drive bigger movements in the Pound to Euro (GBP/EUR) exchange rate.
If there are any surprises in the UK coronavirus pandemic situation, such as signs that a second UK lockdown is becoming more likely, the Pound (GBP) could see fresh losses.
Similarly, the Euro (EUR) could see fresh losses if the Eurozone’s own coronavirus situation worsens.
As for data, Eurozone confidence and German inflation on Tuesday could cause movement.
These will be followed on Wednesday by Britain’s final Q2 growth rate results. German retail sales figures could also cause movement on Wednesday.
Towards the end of the week, Markit’s manufacturing PMIs for the UK and Eurozone, as well as Eurozone unemployment data will be published.
Of course, any surprising developments in UK-EU Brexit relations could also be a big cause of Pound to Euro (GBP/EUR) exchange rate movement.