UPDATE: The GBP/EUR exchange rate continued to fall later this afternoon after it was recorded that UK Covid-19 deaths had hit their highest daily total since March at 96.
Daily cases of Covid-19 also rose by 9,898 compared to last week, bringing the total up to 46,558 daily cases with 4,567 in hospital versus last week.
As a result, concerns over a new lockdown have dented confidence in the UK’s economic recovery going forward.
The Euro (EUR) has continued to head higher against Sterling following encouraging news about increasing borrowing appetite in the Eurozone.
GBP/EUR Exchange Rate Sinks as Delta Variant Fears Dampen UK Market Mood
The Pound Euro exchange rate fell by -0.2% today as concerns over the spread of the Delta coronavirus variant throughout England has limited confidence in economic recovery. The pairing is trading around €1.15 at the time of writing.
With news that hospitals throughout the UK are struggling to cope with the rising number of hospitalisations, GBP investors have become more cautious.
Tim Spector, lead scientist on the study and a professor of genetic epidemiology at King’s College London, also warned about the risks of long Covid, saying:
‘Vaccines have massively reduced severe infections and post-vaccination Covid is a much milder disease for most people. The main concern is now the risk of long Covid.’
As a result, the GBP/EUR exchange rate has fallen on growing concerns that another lockdown could be imminent, possibly limiting the nation’s economic recovery going into the autumn months.
Today’s UK data calendar is very light with no releases of any note being due for release until later this week.
Could we see the Pound Euro exchange rate fall more sharply if rising Covid-19 infections, hospitalisations and deaths are report during today’s session?
Euro (EUR) Exchange Rate Edges Higher as Eurozone Lending Survey Reveals Increased Borrowing Appetite
The Euro (EUR) rose today following the release of the Eurozone bank’s lending survey which revealed an increased borrowing appetite.
As a result, the single currency has benefited from renewed confidence in the outlook for the Eurozone’s economy in the months ahead.
Bert Colijn, ING’s senior economist for the Eurozone, however warned:
‘Demand for borrowing is returning, which is positive from a recovery perspective, but banks remain cautious. The latter will likely dampen the lending recovery to some degree. All in all though, the bank lending survey supports a picture of an investment recovery for the months ahead, adding to the strong household consumption recovery.’
Today also saw the release of June’s German PPI figure beat forecasts and rise by 1.3%.
With the outlook for the Eurozone’s largest economy improving, we could see the EUR/GBP exchange rate continue to head higher this week.
GBP/EUR Exchange Rate Forecast: Could Rising UK Covid-19 Numbers Drag Down Sterling?
Euro (EUR) investors will be looking ahead to Thursday’s European Central Bank (ECB) interest rate decision.
Although the bank is expected to hold rates at 0%, a bullish monetary policy report would see the Euro Pound exchange rate head higher.
Thursday will also see the release of the flash Eurozone consumer confidence report for July. Could improving optimism in the bloc’s economy see the single currency rise?
Pound (GBP) traders will monitor the UK’s Covid-19 developments this week.
If Covid-19 infections and hospitalisations threaten to overwhelm hospitals, then Sterling would suffer on growing fears of another lockdown period.