GBP/EUR Exchange Rate Rangebound, But Could Rising Daily Coronavirus Cases Weaken Sterling?
(Updated: 16/08/2021 16:16) The Pound Euro exchange rate remained steady later this afternoon as UK markets now eye the latest Covid-19 data. Any uptick in daily infections or hospitalisations would be GBP-negative. The pairing is currently trading around €1.17.
Further tensions between the UK and EU also have not helped the GBP/EUR exchange rate. This follows former Prime Minister Gordon Brown’s criticism of the European Union’s ‘neo-colonial approach’ to Covid-19 vaccine supplies.
‘Compared to the swift development of the pathbreaking Covid vaccines, getting shots into all the world’s arms should be straightforward. But vaccine nationalism – and Europe’s neo-colonial approach to global health – is dividing the world into rich and protected people, who live, and those who are poor, unprotected and at risk of dying.’
With Eurozone economic data being thin on the ground today, the EUR/GBP exchange rate has also fluctuated in the mid-range.
Pound Euro Exchange Rate Rangebound, UK Economic Optimism Steadily Returns
The GBP/EUR exchange rate held steady today with nothing of note in terms of UK or Eurozone economic data, leaving both currencies effectively rudderless. The pairing is currently fluctuating around €1.17.
Instead, Pound investors are becoming steadily more optimistic about the outlook for the UK’s labour sector.
With unemployment not expected to fall significantly following the end of the furlough scheme, the outlook for the nation’s economy is beginning to look more positive.
The Economic and Social Research (NIESR) has revised its UK economic growth forecast from 5.7% to 6.8%, citing the boost to activity following the easing of lockdown measures last month.
Rob Dobson, a director of IHS Markit, was also confident in the UK’s manufacturing sector, saying:
‘[M]anufacturers are benefiting from reopening economies. This is leading to solid inflows of new work from both domestic and overseas markets, including the US, the EU, China and the Middle East.’
Meanwhile, a minor drop in daily Covid-19 infections throughout the UK has also brought with it a sense of returning stability to the economy, buoying the Pound.
Euro Exchange Rate Steady as Risk-Off Mood Drives Demand for EUR
The Euro (EUR) struggled to rise against the Pound (GBP) today despite risk-off market mood driving-up demand for the safe-haven single currency.
With chaos unfolding in Afghanistan after the United States withdrew military efforts in the nation, global market mood has been upset, driving demand for safe-haven currencies.
Added to this, falling retail sales and industrial production in China has sparked concerns for the world’s second-largest economy.
Louis Kuijs, head of Asia economics at Oxford Economics, said:
‘Given China’s ‘zero tolerance’ approach to Covid, future outbreaks will continue to pose significant risk to the outlook, even though around 60% of the population is now vaccinated.’
In absence of Eurozone economic data, however, the EUR/GBP exchange rate is steady as single currency investors look to Tuesday’s release of the Eurozone’s GDP data for the second quarter.
GBP/EUR Exchange Rate Forecast: Eurozone GDP Data in Focus
Tomorrow will see the release of the Eurozone’s GDP data for the second quarter. Could growth in the bloc’s economy see the single currency head higher?
Pound (GBP) traders will eye tomorrow’s ILO unemployment rate report for June. Any indications of falling levels of unemployment would be GBP-positive.
Covid-19 developments in the UK and the Eurozone will remain in focus this week. If Covid-19 infections continue to fall in the UK, then the Pound would rise.