Pound Euro Exchange Rate Continues to Benefit from Pound Strength
While movement this week has been mixed, the Pound Euro (GBP/EUR) exchange rate is overall trending with an upside bias. Investors find the Pound (GBP) appealing due to Britain’s coronavirus recovery outlook.
GBP/EUR plummeted from the interbank level of 1.17 to 1.15 last week. This week so far, GBP/EUR has been struggling to advance but is still generally trending with an upside bias.
Last night, GBP/EUR touched on a monthly low of 1.14, but the pair is trending just above the week’s opening levels again at the time of writing.
German and Eurozone inflation data is due through the rest of the week. As for the Pound, Britain’s coronavirus situation will remain influential.
Pound (GBP) Exchange Rates Climb as UK Outlook Remains Strong
Investors continue to find the Pound appealing, despite the currency’s selloff last week.
Sterling was sold from its highs in profit-taking, but the latest slew of UK data beat forecasts and indicated that Britain’s economy was weathering its third coronavirus lockdown better than expected.
Sterling sentiment did take a hit yesterday, as markets reacted to surprising news that Bank of England (BoE) Chief Economist Andy Haldane would step down. As a more hawkish BoE official, news of his departure led to some uncertainty around the BoE.
According to Fawad Razaqzada, Analyst at TF Gloval Markets:
‘People bullish on the Pound are not taking any chances, as he could be replaced by a dovish policymaker.’
Euro (EUR) Exchange Rates Benefit from Signs of Rival Weakness
Demand for the Euro has been highly mixed over the past few weeks, as optimism over the UK and US coronavirus recovery outlooks compared to the Eurozone’s left the Euro unappealing.
However, rising signs that the Eurozone economy could recover by the end of the year are boosting the Euro’s appeal slightly.
This, combined with slightly weaker Pound and US Dollar (USD) demand over the past week, has helped the Euro to strengthen and hold some gains.
The Euro is benefitting from a weaker US Dollar as US investors doubt that there will be a sustained rise in US inflation any time soon.
Recent Eurozone data has been mixed as well, but the Euro’s movement has been driven largely by movement in rivals like the Pound and US Dollar.
Pound Euro (GBP/EUR) Exchange Rate Looks to Eurozone Inflation Results
Thursday’s session will see the publication of Germany’s final March inflation rate results, with overall Eurozone inflation following on Friday.
The Eurozone’s February trade balance report will also be published on Friday.
If upcoming Eurozone data is stronger than expected, it could boost hopes that the Eurozone’s economic resilience is improving. This could bolster coronavirus recovery hopes and make the Euro more appealing.
Much of the Euro’s appeal will likely remain tied to the appeal of the Pound and the US Dollar however. If Britain’s coronavirus recovery outlook remains optimistic, investors may be hesitant to sell Sterling too much so GBP/EUR could remain high.
On the other hand though, if the US Dollar’s recent strength has run out of steam investors are more likely to buy the Euro and the Pound Euro (GBP/EUR) exchange rate could weaken.