Pound Euro Exchange Rate Steady on UK Covid Hopes
The Pound Euro (GBP/EUR) exchange rate is currently trading just shy of a 20-month high struck at the start of today’s European trading session, amidst signs UK coronavirus statistics may be improving.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1873, virtually unchanged from this morning’s opening rate.
Pound (GBP) Buoyed by Suggestions the UK’s Latest Coronavirus Wave May have Peaked
The Pound (GBP) is trading with modest gains so far this morning, amidst hopes that the UK’s recent spike in coronavirus cases may have already peaked.
Last week, daily cases in the UK rose above 50,000 for the first time in three months, leading to scientists and opposition parties to call for the government to immediately implement its Plan B measures, which include encouraging people to work from home, mandatory mask wearing and vaccine passports.
However Monday’s data reported a sharp fall in new infections, with daily cases falling to 36,567.
This appears to support some modelling done by the London School of Hygiene and Tropical Medicine (LSHTM), which suggests that the recent rise in infections may have peaked and that new cases are set to fall rapidly in the coming weeks.
Whilst it is still too early to tell whether this is the case, the potential for the government to avoid imposing fresh restrictions has been welcomed by GBP investors.
Euro (EUR) Muted as Germany to Cut 2021 Growth Forecast
At the same time, the Euro (EUR) is trading without any strong directional bias this morning, following comments from Germany’s Economy Minister Peter Altmaier.
Altmaier announced the government will cut its 2021 GDP forecast from 3.5% to 2.6%, as the country’s economic recovery shows signs of slowing due to supply chain constraints.
This follows a similar warning from Germany’s Bundesbank on Monday, and comes ahead of the publication of Germany’s latest GDP figures on Friday.
Pound Euro Exchange Rate Forecast: UK Autumn Budget in Focus
Looking ahead, acting as the main catalyst of movement in the Pound Euro (GBP/EUR) exchange rate in mid-week trade is likely to be the publication of the UK’s Autumn Budget.
Chancellor Rishi Sunak has already offered some hints as to what the budget will include, with a sharp rise in the national living wage and increased spending on healthcare expected.
However GBP investors will be primarily focused on Sunak’s tax plans as well as what support he might provide to businesses to help them recover from the ongoing pandemic.
Also of note will be the latest forecasts from the Office for Budget Responsibility (OBR), with the Pound potentially facing some headwinds if the OBR warns of a slowing of economic growth in the fourth quarter.