Pound Euro Exchange Rate Strengthens after Dovish Commentary from ECB President

The Pound Euro (GBP/EUR) exchange rate has strengthened since markets opened this morning following dovish commentary from the European Central Bank (ECB) president Christine Lagarde.

At the time of writing the GBP/EUR pairing are trending around the 1.1636 level as a lack of notable data from the UK could limit any major gains for Sterling heading into the weekend.

Pound (GBP) Supported by UK Economic Reopening Optimism

The Pound has been supported this morning as optimism surrounding the UK’s economic reopening helps to strengthen Sterling.

The UK’s 19th July ‘freedom day’ is expected to go ahead without any delays, though some NHS bosses remain cautious surrounding the reopening.

Saffron Cordery, deputy chief executive of NHS Providers, spoke on the proposed reopening saying:

‘Trust leaders are increasingly confident that vaccines are breaking the chain between infections, serious illness and deaths. But they are understandably nervous about what a wholesale lifting of restrictions on 19 July could mean for the NHS.’

‘We are dealing with a fast-moving, ever-changing picture and the reality on the frontline is that even a small increase in Covid-19 admissions or emergency care pressures could affect our ability to deliver non-Covid services in a context where many staff are exhausted.’

Euro (EUR) Stumbles on Dovish ECB Commentary

The Euro has stumbled against many of its major rivals this morning following recent dovish comments from the ECB president Christine Lagarde.

In an interview with French newspaper La Provence the ECB president spoke on the Eurozone’s economic recovery, saying:

‘The ECB’s primary mandate, laid down by Europe’s founders, is to maintain price stability. For that, the economy needs to be running smoothly, there needs to be investment, growth and job creation. It’s in this context that we offered our support by using the two levers of emergency purchases and exceptional loans at extremely favourable conditions.’

‘And we agreed to maintain these measures until at least March 2022, and in any case, until we judge that the coronavirus crisis phase is over. While the recovery is now beginning to get under way, it remains fragile.’

The Euro could be open to further losses this afternoon as a lack of notable data from the Eurozone along with the release of the latest non-farm payrolls figures from the US could limit the single currency heading into the weekend.

US non-farm payrolls are expected to perform well bolstering the US Dollar to new highs and in turn weakening the Euro.

Pound Euro Exchange Rate Outlook: Markit PMI Data in Focus

Heading into next week both Pound and Euro investors will be looking towards the latest Markit PMI figures from the UK and Eurozone.

The figures will give a clear indication into how the respective economies are performing and are expected to drive movement in the pairing at the start of the week.

The GBP/EUR exchange rate will continue to be driven by any further coronavirus developments next week as the UK’s 19th July ‘freedom day’ moves ever closer.

Georgina Clissold

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