GBP/EUR Exchange Rate: Pound Tumbles from Two-Month High Following Dovish BoE Policy Statement
The Pound to Euro (GBP/EUR) exchange beat a hasty retreat through the second half of last week, with the pairing tumbling from a two-month high in the wake of the Bank of England’s (BoE) latest interest rate decision.
GBP investors were left disappointed by the BoE’s surprisingly dovish tone, which saw it avoid any discussions regarding the tapering of its quantitative easing programme.
Extending the downside in the GBP/EUR exchange rate this week has been the UK’s finalised GDP figures, which saw growth revised from –1.5%, back to –1.6% in the first quarter of 2021.
Looking ahead, GBP investors are likely to look to a speech by BoE Governor Andrew Bailey for fresh impetus later this week, with the Pound poised to slump further if Bailey reiterates the bank’s current dovish stance.
GBP/USD Exchange Rate: Sterling Undermined by Delta Variant Concerns
After a brief reprieve last week, the GBP/USD exchange rate has trended broadly lower, with Sterling sentiment being steadily sapped by domestic coronavirus concerns.
The most recent statistics have shown a worrying rise in new cases over the past week, with the more transmissible Delta variant continuing to spread rapidly throughout the UK.
While the new Health Secretary Sajid Javid has stated that the 19 July reopening date is set to go ahead, GBP investors remain wary of the potential for another delay, which would further setback the UK’s economic recovery.
Should UK coronavirus statistics continue to deteriorate, it’s likely the Pound could face additional pressure through the coming week.
USD/GBP Exchange Rate: US Dollar Bolstered by Weakening Risk Appetite
The USD/GBP exchange rate has steadily risen over the past week, as traders increasingly favour the safe-haven US Dollar amidst a prevailing risk-off mood.
This comes as a worrying rise in Delta variant coronavirus cases in many parts of the world have unnerved investors and stoked concerns over the global economic recovery.
However, this uptrend in USD exchange rates could be tested at the end of this week, with the publication of the latest US non-farm payroll figures.
The highly influential US data release has underperformed over the past two months, and another disappointing payroll reading in June could exert some significant pressure on the US Dollar.
EUR/USD Exchange Rate: Euro Subdued as Eurozone Inflation Slows
The EUR/USD exchange rate was mostly able to hold its ground through the second half of last week, as the Euro was buoyed by some upbeat economic releases, mostly notably the bloc’s latest PMI figures, which reported economic activity struck a 15-year high in June.
However, the single currency has so far struggled to hold its ground this week as it has been pressured by a dominant US Dollar, as well as concerns over the spread of the Delta variant in Europe.
Also weighing on the Euro has been the Eurozone’s latest consumer price index, which revealed inflation in the bloc slipped back below the European Central Bank’s (ECB) target range in June.
Turning to the second half of this week the focus for EUR investors is likely to be Germany’s latest retail sales figures. Will a sharp rebound in sales growth in May offer some support to the Euro?