GBP/EUR Exchange Rate as Economic and Covid-19 Fears Drag Down the Pound
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with fears over the Covid-19 pandemic and Britain’s economic recovery weighing on UK market sentiment. The pairing is currently trading around €1.108.
Analysts Deutsche Bank reported:
‘Here in the UK, a record 26,707 cases were confirmed, while the number of hospitalisations in England rose above 6k for the first time since late May.
‘It should be noted however that testing today is much more widespread than it was during the first wave back in March, so countries are much better at picking up the extent of the virus than they were before.’
Brexit developments continue to buoy the Pound, however, with trade talks set to resume between the UK and the EU in London.
Brexit talks will enter an ‘intensified phase’ today. Both sides will attempt to reach a compromise on trade issues.
Michel Barnier EU’s Chief Negotiator warned it is ‘entirely possible that negotiations will not succeed.’
Meanwhile, GBP investors are awaiting today’s speech from the Bank of England’s (BoE) Chief Economist Andy Haldane.
Any further hints at a possibility of taking interest rates into negative territory would prove GBP-negative.
In UK economic data, this evening will see the release of October’s GfK Consumer Confidence report.
If this confirms forecasts and sinks to -28, then the GBP/EUR exchange rate could fall on an increasingly grim outlook for Britain’s economy.
Euro (EUR) Steady as Outlook for Eurozone Economy Dims as German Consumer Morale Falls
The Euro (EUR) struggled against Sterling this morning as the outlook for the Eurozone’s economy continues to darken.
This follows downbeat comments about economic uncertainty from the European Central Bank (ECB) earlier this week.
In Eurozone economic news, today saw the publication of the German GfK Consumer Confidence Survey for November. This fell to a worse-than-expected -3.1.
Carsten Brzeski, the Global Head of Macroeconomics at ING, commented on the report:
‘Looking ahead, new uncertainty and new restrictions as well as local lockdowns have already started to dampen consumer confidence and the prospects for private consumption. Even if the current measures in Germany can still be labelled as ‘smart lockdowns’, the fact that they will mainly affect sectors which have already been hit the most by the crisis (culture, restaurants, hotels, leisure) is already weighing on consumers.’
Consequently, EUR traders are becoming more concerned as Germany – the Eurozone’s largest economy – faces setbacks as Covid-19 infections rise throughout much of Europe.
EUR investors will be awaiting today’s release of the Eurozone’s flash Consumer Confidence report for October.
Any indications that the Eurozone’s economy is struggling would drag down the EUR/GBP exchange rate.
GBP/EUR Forecast: Could a Brexit Deal Breakthrough Boost Sterling?
Pound (GBP) traders will be awaiting tomorrow’s release of the flash UK Markit Services PMI for October.
Any signs of improvement in Britain’s largest sector would boost confidence in the economy and uplift Sterling.
Tomorrow will also see the release of September’s UK Retail Sales data.
Consequently, we could see the Pound (GBP) rise as the outlook for the UK economy improves.
In Eurozone economic news, Friday will see the publication of the Markit Manufacturing PMI for October.
If this shows a marked setback in the Eurozone’s manufacturing sector, then we could see the single currency suffer.
The GBP/EUR exchange rate will be driven by Brexit news this week. Any signs of a breakthrough over a trade deal proving GBP-positive.