Pound Euro Exchange Rate Steady as Europe’s Third Wave Continues to Grow
The Pound Euro (GBP/EUR) exchange rate is currently trading just shy of the one-year high struck yesterday as Europe’s coronavirus resurgence continues to dominate headlines.
At the time of writing the Pound Euro exchange rate is trading at around €1.1726, up roughly 0.2% from this morning’s opening levels.
Euro (EUR) Undermined by Coronavirus Concerns
The Euro (EUR) is on the back foot against the Pound (GBP) and the majority of its other peers this morning, with investors remaining wary of the single currency as Europe weathers what may be its worst wave of coronavirus infections so far.
Cases are rising at an alarming rate across the continent and leaders are under pressure to impose stricter restrictions in order to contain the spread of a more infectious variant which originated in the UK.
The coronavirus resurgence has also seen tensions between leaders flare as a number of countries have started to tighten border restrictions.
In Paris doctors penned a letter in the Le Journal du Dimanche newspaper, in which they warned that hospitals are on the verge of being overwhelmed.
The letter read:
‘We already know that our capacity to offer care will be overwhelmed. We will be obliged to triage patients in order to save as many lives as possible. This triage will concern all patients, with and without COVID, in particular for adult patients’ access to critical care.’
Applying additional pressure to the Euro this morning has been the strengthening of the US Dollar (USD), aa a result of the negative correlation between the pairing.
Pound (GBP) Underpinned by Reopening Hopes
The Pound, meanwhile, is ticking higher this morning as the currency draws support from hopes that more parts of the UK economy will soon be able to reopen.
This comes after Boris Johnson suggested that he can’t ‘see anything in the data right now that would cause us to deviate from the road map’, which will see non-essential retail in England allowed to reopen on 12 April.
However, the upside in the Pound remains limited as GBP investors remain wary that Europe’s coronavirus resurgence could still spill over in the UK and force a rethink of the roadmap.
Pound Euro Exchange Rate Forecast: Strong German Inflation to Bolster the Euro?
Looking ahead, the Pound Euro exchange rate could be forced to give some ground later this afternoon, following the publication of Germany’s consumer price index (CPI).
Economists are forecasting that Germany’s latest CPI reading will report domestic inflation accelerated from 1.3% to 1.7% in March, potentially offering some support to the single currency.
Meanwhile GBP investors will look to Wednesday’s GDP release for fresh impetus. The finalised figures for the last quarter of 2020 are expected to confirm the UK economy expanded by a healthy 1%, and offer support to the Pound, although Sterling is vulnerable to losses if growth is revised lower.