Pound Euro (GBP/EUR) Exchange Rate Extends Downside as UK Economic Woes Grow
(Updated 16:00, 8/4/22) The Pound Euro (GBP/EUR) exchange rate has continued its descent today as economic worries weigh on the Pound (GBP).
The UK’s cost-of-living crisis has pushed household finance confidence to a new record low, according to YouGov’s latest analysis.
Emma McInnes, Global Head of Financial Services at YouGov, commented:
‘The ongoing cost of living crisis and uncertainty caused by continued conflict in Ukraine has, once again, seriously impacted on both consumer confidence and the public’s household finances. For the second month running, tumbling household finance measures – both retrospective and forward-looking – find themselves at their lowest ever level since tracking began almost ten years ago.’
The latest reminder of the crippling income squeeze comes as the UK faces other challenges. Thousands of lorry drivers are gridlocked on the road to Dover amid ferry disruption. Meanwhile, airlines are cancelling hundreds of flights across the UK due to staff shortages.
At the time of writing, GBP/EUR is trading at €1.1961. This is 0.6% lower than the 11-day high of nearly €1.2035 from earlier this morning.
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Pound Euro (GBP/EUR) Exchange Rate Stumbles amid Travel Chaos and Positive Mood around Ukraine
The Pound Euro (GBP/EUR) exchange rate rose to an 11-day high overnight, but fell sharply as European trade began.
The downside in GBP/EUR comes as travel chaos in the UK adds to the country’s economic headwinds. Meanwhile, markets are upbeat amid positive developments around the Russia-Ukraine war, which is lifting the Euro (EUR).
Pound (GBP) Slips amid Travel Industry Chaos
The Pound (GBP) stumbled this morning as travel chaos across the UK is adding to the country’s economic woes.
With Covid travel restrictions now lifted, the Easter holidays are set to be the busiest period for UK travel since the pandemic began. However, recruitment issues and staff shortages due to rising Covid cases have devastated the industry, leading to hundreds of flight cancellations.
Meanwhile, cross-Channel services are also buckling under the pressure. P&O Ferries services remain suspended, stranding customers who have been unable to make alternative arrangements.
Holidaymakers heading to Dover are also finding themselves gridlocked in traffic, due to the shortage of ferries and long queues of freight lorries. Dover District Council is considering declaring a major incident.
The chaos could spell more hardship for the UK travel industry, which was hammered by the pandemic.
It also points to underlying problems in the UK economy, including staff shortages, at-risk companies, and supply-chain disruption.
These worries are adding to fears over the UK’s cost-of-living crisis, pushing GBP lower today.
Euro (EUR) Firms amid Upbeat Market Mood
Meanwhile, the Euro is edging higher against most of its rivals today as the European market mood improves.
Although the war in Ukraine continues, Russian forces have pulled back in recent days after facing fierce resistance. The Kremlin initially played down the failure of the invasion, but has recently admitted suffering heavy losses.
In an interview with Sky News, Kremlin spokesperson Dmitry Peskov said:
‘We have significant losses of troops. And it’s a huge tragedy for us.’
As the Russian army withdraws from Kyiv, Ukrainians are returning to the capital city and surrounding area. Last night, hundreds of refugees in Poland were queuing for trains back to their homeland.
These positive developments seem to be cheering European investors today. The upbeat mood is evident in the equity markets. At the time of writing, the STOXX 600 and the FTSE 100 are both up 1% on the day.
Pound Euro Exchange Rate Forecast: Russia-Ukraine Sentiment Could Shift
With a lack of data on both sides, the market mood – particularly around Ukraine – could drive GBP/EUR today.
While the current mood is upbeat, risk sentiment can quickly turn around, which may dent EUR. Russian attacks continue in eastern Ukraine, where Moscow is now focusing its attention. In addition, many fear that the recent atrocities uncovered in Bucha are indicative of the situation in other Russian-occupied towns. If more evidence of the mass murdering of civilians comes to light, the mood could sour again.