Pound to Euro Steady as Eurozone’s Economic Outlook Dims as Stimulus is Vetoed
The Pound to Euro (GBP/EUR) exchange rate held steady today, with the pairing currently fluctuating around €1.114.
The Euro (EUR) fell today on reports that the European Union (EU) could face a crisis after Hungary and Poland vetoed the EU’s seven-year Covid-19 recovery package.
As a result, EUR traders are becoming increasingly worried of an unprecedented setback for the Eurozone’s economic recovery, owing to the lack of consensus amongst the 27 member states.
Rasmus Andresen, a former member of the European parliament’s negotiation team, commented:
‘The resistance of Orbán and the Polish government is irresponsible. Orbán is afraid that the new rule of law mechanism will harm his autocratic regime. He is trying to take Europe and Covid hostage for his failed policies.’
EUR traders will be awaiting today’s speech from the European Central Bank’s President Christine Lagarde.
If Lagarde confirms fears of a bleak outlook for the Eurozone’s economy, then we could see the EUR/GBP exchange rate fall.
Meanwhile, single currency investors are remaining cautiously optimistic following this week’s encouraging news of a potential Covid-19 vaccine.
Pound (GBP) Steady as Downing Street Reviews England’s Covid Tier System
The Pound held steady today following reports that the UK Government is reviewing England’s Covid-19 tiering system ahead of December.
Robert Jenrick, the Secretary of State for Housing, Communities and Local Government, said that Downing Street wanted to see a ‘significant easing’ of controls for a ‘somewhat more normal December’.
Mr Jenrick added:
‘[I]t is too early to say which tiers people will be able to go into. But we all want to see a significant easing of the measures in all parts of England at the beginning of next month.’
Brexit also remains in focus after news that the EU’s vote on a Brexit deal could be delayed until as late as December 28th.
As a result, GBP traders have become more concerned about a possible no-deal Brexit.
Simon Coveney, Ireland’s foreign minister, was also pessimistic, saying that talks between the two sides were ‘not in a good place’ on fishing rights.
Today will se the Bank of England’s (BoE) Governor Andrew Bailey deliver a speech.
Any downbeat commentary about Britain’s economic performance in the months ahead would prove GBP-negative.
GBP/EUR Outlook: Could a Gloomy Outlook for the Eurozone Drag Down the Euro?
Pound traders will be awaiting tomorrow’s release of October’s UK Core Consumer Price Index.
Any signs of a struggling British economy would drag down the GBP/EUR exchange rate.
Tomorrow will also see a nother speech from the BoE’s Andrew Bailey. Again, a downbeat commentary would prove GBP-negative.
EUR traders will also be monitoring the Eurozone’s economic and Covid-19 situation this week.
If the outlook for the Eurozone’s economy continues to deteriorate following complications over the EU Covid-19 stimulus package, then the GBP/EUR exchange rate could head higher.