GBP/EUR Exchange Rate Rangebound as Europe Cautiously Loosens Covid-19 Restrictions
The Pound Euro exchange rate held steady this morning following the release of Germany’s GfK consumer confidence survey for June, which fell below forecasts to -7. The pairing is currently trading around €1.15.
The Euro struggled to gain against Sterling despite modest signs of German consumer confidence returning to the Eurozone’s largest economy.
Rolf Bürkl, GfK consumer expert explained the statistic, saying:
‘We are leaving the third wave more and more behind us, the incidence values have been decreasing significantly for several weeks. And we are also making great progress when it comes to vaccination. As a result, loosening of restrictions and a reversal of the strict lockdown are possible. This primarily fuels economic optimism and creates a mood of economic optimism at the moment.’
EUR traders will closely monitor today’s speech from Dr Jens Weidmann, the president of Deutsche Bundesbank.
Any upbeat comments about the outlook for the Eurozone economy would drive up the EUR/GBP exchange rate.
However, the European Central Bank’s (ECB) policy meeting less than two weeks away, single currency traders will be paying close attention to any indications that asset purchases could be scaled back.
If so, we could see the Euro Pound exchange rate head higher, as signs of the Eurozone’s economic recovery would be EUR-positive.
Pound (GBP) Exchange Rate Steady as the UK Hospitality Sector Remains Far from ‘Champagne Moment’
The Pound (GBP) failed to gain against the Euro (EUR) as concerns for the UK economy remain, with Kate Nicholls, the chief executive of UK Hospitality, saying that the hospitality sector was still ‘far from a champagne moment for the industry’.
‘At this point, any delay to the removal of restrictions on 21 June will be nothing short of catastrophic for a sector that has already lost £80bn in sales – two-thirds of its pre-pandemic revenue – over the past year.’
Business leaders have warned Prime Minister Boris Johnson that economic support was still necessary, especially if rising cases of Covid-19 delays further easing of lockdown measures on 21.
As a result, GBP investors have become more cautious in recent weeks as the outlook for the British economy still remains largely uncertain.
In absence of any notable UK economic data today, the Pound could begin to dip against the single currency as growing confidence in the Eurozone’s ability to recover could bolster demand for the Euro.
GBP/EUR Exchange Rate Forecast: Could Improving Confidence in the Eurozone Economy Boost the Single Currency?
Euro (EUR) traders will eye tomorrow’s release of the Eurozone’s latest services sentiment and business climate data for May.
Any further signs that the outlook for the Eurozone’s economy is improving would boost the EUR/GBP exchange rate.
Tomorrow will also see the publication of the French GDP data for the first quarter. If the figure beats forecasts then the single currency would rise against the Pound.
The Pound Euro exchange rate will likely remain subdued this week because of the lack of UK economic data. However, Sterling will suffer if the nation’s daily Covid-19 infection rate continues to creep higher.