The Pound Euro (GBP/EUR) exchange rate has weakened this morning as the UK’s roadmap out of lockdown looks set to be delayed by another four weeks.
At the time of writing the GBP/EUR pairing are trading around the 1.1630 level as the Euro capitalises on the Pound’s weakness during the opening session of the week.
Pound (GBP) Struggles amid UK Lockdown Extension
The Pound is struggling against many of its major rivals this morning as an imminent announcement this evening that the UK will remain in current lockdown restrictions for another month worries investors.
The decision is expected to have been made to help combat the rise in coronavirus infections and the delta variant of the virus as vaccines are rushed forward.
All eyes will be on the Prime Minister Boris Johnson this evening as he leads a press conference regarding the latest coronavirus developments.
Speaking to UK television this morning, junior health minister Ed Argar said that he expected the Prime Minister to announce further support for businesses:
‘I know that when he addresses his decision, sets out what he intends to do around the easing on the 21st, he will address those points as well.’
‘He is very mindful of the need for businesses and others to get the support they need if they continue to be locked down or unable to open.’
Euro (EUR) Supported despite Cautious ECB Commentary
The Euro has found itself supported this morning as a broad weakness in the Pound and US Dollar helps to bolster the single currency.
Despite cautious commentary from European Central Bank president Christine Lagarde regarding the Eurozone’s economic recovery this morning EUR hasn’t lost too much ground:
‘I am not suggesting that the pandemic emergency purchase programme (PEPP) is going to stop on 31 March. We have plenty of flexibility, but in terms of economic outlook we are heading in the right direction. It is far too early to debate these issues.’
‘We are at a turning point where, bearing in mind alternative (virus) variants, we are on that recovery path, heading firmly towards a return to the pre-COVID-19 level.’
A pullback in the US Dollar ahead of the latest FOMC meeting minutes adds further support to the Euro this morning.
Pound Euro Exchange Rate Outlook: UK Employment Change in Focus
Tomorrow will see the release of the latest UK employment change figures for May which are expected to show that people in work rose 145,000 as lockdown restrictions were eased further.
For Euro investors, the latest inflation rate data from Germany, the Eurozone’s largest economy, could see EUR head higher against its rivals tomorrow.
Coronavirus developments will continue to drive movement in the GBP/EUR pairing in the coming days as the UK looks to brace for an extension in current lockdown restrictions.