GBP/EUR Exchange Rate Rises: Euro Suffers as Europe’s Covid-19 Cases Continue to Increase

The Pound Euro (GBP/EUR) exchange rate rose last week as the European Union (EU) faced rising cases of Covid-19 in the Eurozone’s key economies, including France and Germany. Consequently, demand for the Euro fell over growing concerns of a setback for the bloc’s economic recovery. 

What’s Been Happening: Euro Suffers as France Enters a Third National Lockdown

The Euro (EUR) struggled last week as France entered its third national lockdown owing to a surge in cases of the coronavirus, which threatened to overwhelm the nation’s hospitals.

German Frank-Walter President Steinmeier lamented Europe’s situation, saying that there was still ‘no single silver bullet to get out of the pandemic’.

Italy also entered a strict three-day lockdown over the Easter weekend to prevent a surge in Covid-19.

As a result, the Euro Pound (EUR/GBP) exchange rate struggled, with investors becoming increasingly concerned about the outlook for the Eurozone’s economy.

Meanwhile, the Pound (GBP) edged higher as the UK’s latest GDP figure for the fourth quarter beat forecasts and was revised up to 1.3%.

Rupert Thompson, chief investment officer at wealth management firm Kingswood, was optimistic about the data, saying:

‘This follows the recent stronger than expected numbers for business confidence which suggests the contraction in the first quarter will be smaller than first feared.’

UK markets were also cheered by the imminent easing of lockdown on 12th April.

Consequently, demand for Sterling has been relatively stable, with Britain’s economy expected to recover over the next few months.

Three Things to Watch Out for This Week

  1. UK Covid-19 Developments

The UK’s Covid-19 developments will remain in focus this week, with any further signs of falling daily infection rates and hospitalisations boosting confidence in the outlook for the UK economy. As a result, we would see the Pound Euro exchange rate rise.

  • EU’s Covid-19 Situation

The EU’s coronavirus situation will also be in focus especially now that several key economies in the Eurozone have entered a third national lockdown. With concerns rising about the outlook for the bloc’s economy, however, the single currency is likely to fall against many of its peers.

  • German Economic Data

Euro traders will be eyeing this week’s publication of the latest German industrial data for February. Any improvement in factory orders or industrial production could provide the EUR/GBP exchange rate with some uplift.

Pound Euro Forecast

The Pound Euro exchange rate will likely head higher this week, however, as the UK edges ever closer to a further easing of lockdown measures in April.

David Moore

Contact David Moore