Pound Euro Exchange Rate Weakens as Absence of Data Limits Sterling Appeal

(Updated 14:30, 8/7/21) The Pound to Euro (GBP/EUR) exchange rate has weakened further today following the latest ECB monetary policy meeting.

The ECB have set a symmetric inflation target of 2% a move that would give the central bank more room to run accommodative monetary policy for longer.

Ima Sammani, FX market analyst at Monex Europe explains:

‘The highly anticipated news has helped EURUSD climb higher over the course of today’s session, rebutting the broader G10 market move into haven currencies, as concerns over growth remain prevalent.’

‘By committing to a policy stance that will be growth supportive over the recovery period, the euro is merely reacting to the prospect of downside risks to the growth outlook dissipating somewhat.’

Original article continues below:

The Pound Euro (GBP/EUR) exchange rate has edged lower this morning as a lack of economic data from the UK continues to limit the appeal of Sterling.

At the time of writing the GBP/EUR pairing are trending around the 1.1656 level as the Euro firms following the latest FOMC minutes from the US.

Pound (GBP) Edges Lower as Coronavirus Concerns Limit Sterling Sentiment

The Pound has edged lower since markets opening this morning as concerns over England’s proposed lockdown easing paired with a lack of economic data limited GBP exchange rates.

Whilst England’s lockdown easing is expected to go ahead on the 19th July, with most social distancing rules scrapped, a group of scientists have come forward to denounce the plans.

A letter published today in the medical journal The Lancet signed by over 100 experts, including Dr Chaand Nagpaul, the chair of the British Medical Association (BMA), read:

‘In light of these grave risks, and given that vaccination offers the prospect of quickly reaching the same goal of population immunity without incurring them, we consider any strategy that tolerates high level of infection to be both unethical and illogical.’

‘As the third wave of the pandemic takes hold across England, the UK government plans to further re-open the nation. Implicit in this decision is the acceptance that infections will surge, but that this does matter because ‘vaccines have broken the link between infections and mortality’. On July 19 2021 — branded Freedom Day — almost all restrictions are set to end. We believe this decision is dangerous and premature.’

Prime Minister Boris Johnson is expected to make a final decision regarding the lockdown easing on the 12th July, a week before ‘freedom day’.

Euro (EUR) Firms on US Dollar Weakness

The Euro has firmed since markets opened this morning as a positive German balance of trade along with a weakening US Dollar supported the single currency’s sentiment.

Whilst the US Dollar had strengthened over night following the latest FOMC minutes, this morning markets appear to have digested the commentary and the Euro has found renewed strength.

More so the Eurozone’s largest economy, Germany recorded a widening trade surplus during May of 12.3 billion, indicating a 43.3% increase in exports to EU countries.

The Euro could be open to losses this afternoon if the US initial jobless claims continue to fall and impress markets.

Pound Euro Exchange Rate Outlook: UK GDP Data in Focus

For Pound investors, the latest UK GDP data for May is expected to show a high reading as more of the UK left harsher lockdown restrictions.

If the figures impress markets and investors alike then Sterling could find a much needed boost heading into the weekend.

For Euro traders, a speech from European Central Bank (ECB) President Lagarde could drive movement in EUR exchange rates before the weekend.

Georgina Clissold

Contact Georgina Clissold