The Pound Euro (GBP/EUR) exchange rate opens this week on the defensive, after UK Health Secretary Matt Hancock suggested the government is ‘open’ to delaying the final lifting of lockdown measures later this month.
What’s Been Happening: Pound Euro Fluctuates as UK Coronavirus Developments Dominate
The Pound drifted lower through the first half of last week’s session, amidst fears the rapid spread of the Delta variant of the coronavirus throughout the UK, could disrupt the government’s roadmap for easing lockdown measures.
Sterling sentiment then began to improve in mid-week trade following upbeat remarks from Boris Johnson regarding plans to open up more of the economy this month.
However, data showing that new coronavirus cases had more than doubled for the week, saw the Pound face some headwinds again at the very end of the week.
The Euro, meanwhile, got off to a strong start last week as the Eurozone’s latest manufacturing PMI and inflation releases printed above expectations in May.
The single currency failed to sustain these gains however, with EUR exchange rates initially slipping on some lacklustre German retail sales figures, before being further undermined by a stronger US Dollar (USD).
Three Things to Watch Out for This Week
- UK Coronavirus Headlines
A key catalyst of movement in the GBP/EUR exchange rate this week will be UK coronavirus developments. Expect to see the Pound plunge if the government further hints at potentially delaying the next stage of reopening.
- ECB Rate Decision
In focus for EUR investors this week will be the European Central Bank’s (ECB) latest rate decision. No policy changes are expected, but a dovish outlook from the bank could undermine the Euro.
- German Economic Sentiment
Also influencing EUR exchange rates this week will be the latest German ZEW economic sentiment index. Will the continued improvement in sentiment drive the single currency higher?
Pound Euro Forecast
Looking ahead, the Pound Euro exchange rate could trade in a wide range again this week as UK coronavirus developments and the ECB threaten to infuse the pairing with volatility.