Pound Euro (GBP/EUR) Exchange Rate Rises and Falls as Omicron Cases Grow
The Pound Euro (GBP/EUR) exchange rate initially rose this morning, hitting a fresh 22-month high, as Covid optimism continues to boost Sterling. However, it has since dropped sharply and erased the morning’s gains.
The Euro (EUR), meanwhile, is under pressure amid a risk-on market mood and tougher Covid measures in Europe.
Pound (GBP) Slips following NHS Chief Comments
The Pound (GBP) initially gained against the Euro this morning, as Covid optimism and a risk-on market mood boosted Sterling.
Despite daily infections rising to a new record high of 189,213 yesterday, and a steep rise in hospitalisations, the UK government has so far held back from introducing new restrictions over the Christmas period.
In addition, Boris Johnson sounded a note of optimism in his new year’s message, saying ‘our position this December the 31st is incomparably better than last year.’
While it’s unclear whether Johnson will try to implement new Covid measures in January, the likelihood of a full lockdown is very slim.
A front-page story from The Times titled ‘No need for more Covid curbs, say NHS chiefs’ also sparked optimism. However since then, Chris Hopson, the NHS chief quoted in the piece, clarified his statement:
‘I think we are in exactly the same place we’ve been for the past fortnight, which is the government needs to be ready to introduce tighter restrictions at real speed should they be needed.
‘And just to make the point that that is somewhat different to a headline that states NHS leaders think there is no need for more curbs – they may be needed at pace if the evidence warrants it.’
This seems to have dented optimism, with the Pound Euro pair suddenly slipping.
Euro (EUR) Pressured by Covid Restrictions
Meanwhile, the single currency has been under pressure recently as many European countries have introduced tougher measures to try and control the spread of Covid.
Germany, Europe’s largest economy, has closed nightclubs and limited private gatherings. Some German states have also closed culture and leisure venues and placed curfews on bars and restaurants. The German economic recovery has been faltering in recent months, and there are fears that the new measures could exacerbate the situation.
Other European countries are also tightening restrictions. For example, France has closed nightclubs, as has Italy, and Denmark has closed cultural venues.
However, the Euro is showing some resilience today, reversing its losses against the Pound with no clear catalyst for the movement.
Pound Euro Exchange Rate Forecast: Omicron Still in the Spotlight
Looking ahead, coronavirus news may continue to be a defining factor in the Pound Euro exchange rate. Economic data remains thin on the ground over the festive period and both the UK and the Eurozone are facing a crucial moment in the pandemic.
Increased mingling over Christmas may lead to a surge in cases and hospitalisations, which could therefore necessitate new measures. Any negative news in Britain or the Euro area will likely affect the relative currency.