The Pound Euro exchange rate is rangebound so far today as markets respond to the European Central Bank’s (ECB) interest rate decision and accompanying comments from European Central Bank President (ECB) Christine Lagarde.
At the time of writing the Pound Euro exchange rate is currently trading at around 1.6685 as the ECB left rates unchanged and announced it is ready to accelerate its bond-buying programme
Pound (GBP) Steady as UK Coronavirus Deaths Continue to Fall
The Pound is steady this morning as coronavirus cases and deaths continue to fall across the UK.
New daily Covid-19 cases remain under 6,000 and daily deaths remain around the 200 to 300 mark, as lockdown restrictions continue to help combat the coronavirus.
However, investors remain cautious over the roadmap out of lockdown over concerns that easing restrictions too soon could bring a fourth wave of the virus during the summer months.
Speaking earlier in the week to MP’s Professor Chris Whitty said:
‘A lot of people may think this is all over. It is very easy to forget how quickly things can turn bad.’
‘Under all the scenarios, if we unlock very suddenly, all the modelling suggests we would get a substantial surge while a lot of people are not protected.’
Euro (EUR) Rangebound Following ECB Announcement this Afternoon
The Euro broadly weakened but is rangebound against the Pound today after the announcement of the ECB’s interest rate decision.
Markets were right to expect the ECB to keep interest rates at 0% and marginal lending at 0.25%, to help combat the coronavirus pandemic across the Eurozone.
ECB President Christine Lagarde remained cautious surrounding the Eurozone’s recovery at a press conference earlier this afternoon.
Lagarde commented that uncertainty still remained, however regarding inflation the outlook stayed the same as Decembers projections.
With a double-dip recession expected in the bloc and the possibility of a third wave of coronavirus affecting many Eurozone countries, the Euro is benefitting from USD falling, but is suffering as higher-risk currencies like AUD, NZD, ZAR are supported by the upbeat market mood.
Pound Euro Exchange Rate Outlook: Industrial Production Data in Focus
For Pound investors, UK industrial production data from January will be in focus, which a contraction expected in the sector due to the national lockdown announced at the start of January.
The contraction could spell trouble for Sterling, however any further positive coronavirus developments from the UK will limit GBP losses.
Pound investors will also be keeping an eye on UK GDP data released tomorrow, which month-on-month will show a modest decline in growth, adding pressure to GBP.
Euro traders will also be looking towards the Eurozone’s own industrial production data which is expected to show a modest growth in the sector which could add further support to EUR.
The Pound Euro exchange rate will also be dictated by the global market mood, with the US Dollar weakening the Euro could capitalise and rise higher.