The Pound Euro (GBP/EUR) exchange rate has firmed since markets opened this morning as a fall in UK government borrowing supported Sterling sentiment.
At the time of writing the GBP/EUR pairing are trading around the 1.1668 level as an absence of notable data limits the appeal of the Euro.
Pound (GBP) Supported by Fall in UK Government Borrowing
The Pound has seen itself supported against many of its major rivals since markets opened this morning following a fall in UK government borrowing during May.
The Office for National Statistics (ONS) this morning reported that government borrowing fell to £24.3bn during May as much of the UK economy reopened from coronavirus restrictions.
The figure is £19.4bn less than the year previous, though remains well above pre-pandemic levels.
Danni Hewson, AJ Bell financial analyst, commented on the latest figures from the ONS saying:
‘How you look at today’s public sector finances depends if you are a glass half-full or empty person. On the one hand borrowing in May was down by more than £19 billion compared to the previous year, on the other it was the second highest figure for May since records began and almost £19bn more than May 2019.’
‘Furlough costs were down a whopping 75% as the country went back to work and, though it doesn’t help with tax receipts, the fact that income from alcohol duty was down 20% reflects changing fortunes as people are able to reengage with friends and family.’
Euro (EUR) Limited by Lack of Notable Economic Data
The Euro has found itself limited against the Pound this morning as a lack of notable economic data from the Eurozone does nothing to support the single currency.
However, a pullback in the US Dollar today has allowed the Euro to limit any major losses as a result of the negative correlation between the pairing.
It appears that Euro investors are muted in their trading as they await a speech from European Central Bank (ECB) President Lagarde later on today.
Any commentary from Lagarde surrounding the Eurozone’s current economic performance could drive movement in the Euro this afternoon.
Pound Euro Exchange Rate Outlook: Flash Markit PMI’s in Focus
For both Pound and Euro traders, tomorrow will see the release of the latest flash PMI figures from the UK and Eurozone.
Whilst the figures are preliminary estimates for June, they are expected to give an indication into how the respective economies are currently performing.
Pound investors will also keep an eye on any further coronavirus developments in the coming days surrounding the UK’s lockdown easing on the 19th July.