GBP/EUR Exchange Rate Rangebound as Concerns Grow for Eurozone Economy
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently trading around €1.105.
The Euro (EUR) is subdued today as Covid-19 cases rise throughout Europe. This has sparked fears of intensified restrictions and lockdowns in France and Germany, two of the Eurozone’s largest economies.
Senior market analyst at OANDA Jeffrey Halley said the possibility of a new French lockdown would be ‘very bad for the European recovery’. Mr Halley added:
‘The Euro will almost certainly come under more pressure, already on the back foot as investors reduce pre-US-election risk. The chill winds would be felt in European equities as well. The fall-out is unlikely to be confined to just Europe.’
In Eurozone economic news, today saw the release of the French Consumer Confidence report for October, which remained relatively unchanged.
However, with growing fears for the Eurozone’s fourth-quarter – which could suffer a ‘double-dip’ – morale throughout Europe is becoming increasingly compromised.
Pound (GBP) Steady as UK Economic Morale Dips on Fears of Nationwide Lockdown
The Pound (GBP) held steady against EUR as UK economic morale is being wracked by widespread calls for a UK-wide lockdown.
As a result, GBP investors are remaining cautious as this could further threaten Britain’s already fragile economy.
UK Environment Secretary, George Eustice, expressed scepticism over a national lockdown, however, saying:
‘We’re trying to intervene in things in a proportionate way across the country, but we don’t think it’s appropriate to have a national lockdown, because there’s parts of the country, like Cornwall, where the incidence of the disease is actually very low.’
Meanwhile, GBP investors are becoming increasingly nervous about Brexit developments as talks head from London to Brussels.
CBI Director-General Dame Carolyn Fairbairn bemoaned the slow pace of negotiations but was hopeful that a deal would emerge in the end.
Fairbairn said:
‘The thing that’s painful is that it has taken so long to get to a resolution. I think we will get a deal. The remaining issues look soluble.’
GBP/EUR Forecast: Could Brexit Hopes Send Sterling Skyrocketing This Week?
Euro (EUR) investors will be awaiting Thursday’s release of the latest German Unemployment Rate report. If this continues to increase, then we could see the single currency suffer.
Tomorrow will also see the European Central Bank (ECB) announce its interest rate decision, which is forecasts to hold at 0%.
However, any dovishness about the Eurozone’s struggling economy would prove EUR-negative.
Pound (GBP) traders will be eyeing tomorrow’s release of September’s UK Mortgage Approvals figure.
The GBP/EUR exchange rate could head higher this week, however, if Brexit developments hint at a possible post-Brexit trade deal before the year-end.