Pound Euro (GBP/EUR) Exchange Rate Lifts as Euro Downside Prevails
The Pound Euro (GBP/EUR) exchange rate is trending up this morning despite a lack of significant data. Both currencies are facing headwinds, but the Euro (EUR) bears the brunt as US Dollar (USD) strength suppresses the single currency.
At the time of writing, GBP/EUR is trading at €1.1739, up 0.3% from today’s opening levels.
Pound (GBP) Trades Mixed on Domestic and Covid Concerns
The Pound (GBP) is trading variably against its peers today as the UK faces ongoing headwinds over various political developments.
Prime Minister Boris Johnson’s announcement last Tuesday regarding a rise in National Insurance tax is still weighing upon trading sentiment, exacerbated by US Dollar strength as China’s ‘techlash’ persists.
Also pressuring the Pound is the UK’s ambiguity over the possibility of a winter lockdown.
Therese Coffey, the UK’s Work and Pensions Secretary, told reporters ‘it’s ‘fair’ to say that lockdowns, mask wearing, social distancing and working from home remain options on the table’; while clarifying that a decision on this didn’t need to be made urgently.
Investors remain concerned despite Ms Coffey’s reassurance, as coronavirus infections remain at an elevated level in Britain. There were 29,173 cases and 56 deaths reported in the UK yesterday, with infection rates increasing in Scotland and Wales.
Euro (EUR) Ticks Down on USD Strength
The Euro has fallen against the majority of its peers today as the US Dollar finds strength in its safe-haven status. As a result of the strong negative correlation between the Euro and the Dollar, USD upside weighs upon the single currency.
Not only have rising Covid concerns driven investors to risk-aversion; China’s renewed vigour in its war on technology has also dented trading sentiment. The country’s latest moves include a crackdown on the app ‘Alipay’, which had already been forced to restructure its loans business.
Shares of Alibaba, Ant Group’s e-commerce affiliate, fell more than 4% in today’s Asian session, weighing on the broader Chinese tech sector: the Hang Seng Tech index fell more than 2%, and shares of other Chinese tech heavyweights listed in Hong Kong also suffered.
In the wake of China’s tech-targeting actions, EUR downside is seemingly unable to find support in this morning’s German wholesale prices which printed only marginally lower than expected, and improved upon July’s data year-on-year. Today’s rise of 12.3% represents the highest rate since October 1974 after the first oil crisis.
Pound Euro (GBP/EUR) Exchange Rate Forecast: Pound to Firm on Data Release?
Looking to tomorrow, a clutch of UK data has the potential to bolster Sterling. The unemployment rate in the UK is expected to fall, as July’s annual growth in employee pay looks to rise – albeit by less than the month previous.
The Euro, meanwhile, faces another day without any market-moving data, so will be exposed to losses based upon external factors or US Dollar dynamics.
Later in the week, the Eurozone’s CPI data will reveal the bloc’s inflation rate, which is expected to have risen on last month. Such data may enable EUR to recoup some losses.