GBP/EUR Exchange Rate Falls as Eurozone’s Economic Outlook Improves
The Pound to Euro (GBP/EUR) exchange rate dipped by -0.3% today, with the pairing currently fluctuating around €1.108.
The Euro (EUR) rose today following the stronger-than-expected German Retail Sales report for October, which rose from -2.2% to 2.6%.
Analysts at Reuters attributed the rebound to consumer stocking up on essential before the second partial lockdown to contain the spread of Covid-19.
However, more than half of German retails are pessimistic about Christmas sales.
Stefan Genth, the managing director at the German Retail Association (HDE), commented:
‘November and December are normally the strongest months of the year in terms of sales for many retailers. If these sales are now lost, many businesses will be in trouble.’
New Covid-19 lockdowns across Europe are expected to further harm the Eurozone’s economy going into 2021.
Nevertheless, EUR traders are becoming more hopeful that a rollout of the Covid-19 vaccine throughout Europe could stem the spread of the virus and encourage the recover of the bloc’s economy.
Pound (GBP) Sinks Despite Hopes of Covid-19 Vaccine Rollout
The Pound (GBP) failed to gain against the Euro today despite news that Pfizer/BioNTech had been approved by Downing Street for a Covid-19 vaccine next week.
British Health Secretary Matt Hancock commented:
‘The goal will be to vaccinate through the NHS right across the UK as rapidly as the company can manufacture. It will help save lives. Once we’ve protected the most vulnerable it will help us all get back to normal and back to some of the things that we love.’
However, as England has now entered a new regional tier system following the ending of the national lockdown, GBP investors are remaining cautious about the British economy.
55 Tory MPs have also rebelled against the tier motion, sparking concerns over political unity in the House of Parliament.
Meanwhile, growing uncertainty of Brexit is also holding back Sterling.
With no clear signs of progress in UK-EU trade talks, the outlook for the British economy is increasingly uncertain as we head towards the end of the year.
GBP/EUR Outlook: Could Fading Brexit Optimism Drag Down Sterling?
Euro (EUR) traders will be awaiting tomorrow’s release of the final Eurozone Composite PMI for November.
Any signs that the Eurozone’s economy is considerably struggling with the Covid-19 crisis, then we could see the EUR/GBP exchange rate begin to sink.
Pound (GBP) investors will be awaiting tomorrow’s release of November’s UK Services PMI for November.
Any improvement in the UK’s largest sector would be GBP-positive.
However, the GBP/EUR exchange rate is likely to remain subdued this week as investors await further news on Brexit.
If it looks increasingly likely that the UK could leave with a no-deal Brexit at the end of the year, then Sterling will suffer.