GBP/EUR Exchange Rate Steady as UK Market Conditions ‘Remain Challenging’
The Pound to Euro (GBP/EUR) exchange rate held this morning, with the pairing currently trading around €1.102.
Sterling struggled today after a wave of British companies have warned that Covid-19 continues to damage their businesses, six months following the first nationwide restrictions.
Philipp Joeinig, the executive chairman of John Menzies, which is involved in aeroplane refuelling services throughout Britain, commented:
‘We currently anticipate market conditions will remain challenging through the winter and the early part of next year, but expect a sustainable recovery in activity levels thereafter, contributing to modest revenue growth in 2021 over 2020.’
GBP rose on hopes that today’s UK-EU Brexit negotiations could lead to a post-Brexit trade deal.
As a result, Pound (GBP) investors are becoming more positive over a last-minute deal between the two powers.
Ursula von der Leyen, the European Commission Chief, commented:
‘Our economies, on both sides of the Channel, were severely hit by the pandemic and we should do everything possible to find an agreement that is manageable so we do not increase the negative impact on our economies.’
In UK economic news, today saw the release of the August’s Mortgage Approvals, which beat forecasts and rose from 66.3 thousand to 84.7 thousand.
Consequently, GBP investors have become more cautiously optimistic about the British economy’s recovery.
Euro (EUR) Steady ahead of US Presidential Debate
The Euro (EUR) held steady today as investors are becoming increasingly cautious ahead of tonight’s US presidential debate between Donald Trump and Joe Biden.
However, any further volatility in America could boost the safe-haven Euro later on today as the US Dollar – the currency’s competitor – could suffer.
Jasper Lawler of London Capital Group explains:
‘A big upset by Trump could unearth some market volatility as investors re-price a possible Trump second term – or maybe worse – a contested election result and even bigger delays until the next stimulus package gets passed.’
In Eurozone economic data, today will see the release of the Business Climate report for September.
If this continues to fall, however, we could see the single currency tumble against the Pound.
Today will also see the release of the flash German Harmonized Index of Consumer Prices for September.
Any signs of the Eurozone’s powerhouse economy struggling would weigh on the Euro.
GBP/EUR Outlook: Could Post-Brexit Trade Deal Hopes Buoy Sterling?
Pound (GBP) traders will be looking ahead to tomorrow’s release of the UK GDP figure for the second quarter. If this confirms forecasts and falls by -20.4, then we would see Sterling suffer.
Tomorrow will also see a speech from the Bank of England’s Chief Economist, Andrew Haldane. Any hints of taking interest rates into negative territory would prove GBP-negative.
Euro (EUR) investors will be awaiting tomorrow’s speech from the European Central Bank’s President, Christine Lagarde. If she reiterates concerns over the Eurozone’s struggling economy, then the single currency could fall.
In Eurozone economic data, tomorrow will see the publication of Germany’s final Retail Sales figure for August. Again, if the Eurozone’s largest economy struggles, EUR would fall.
The GBP/EUR exchange rate will continue to face volatility over Brexit this week. However, if UK-EU talks show any signs of progress, then GBP would rise on hopes of a post-Brexit trade deal.