Pound to Euro Exchange Rate Struggles to Hold Advance Attempts amid Gloomy UK Data
While some figures were not as bad as forecasts suggested, today’s UK growth rate report still weighed on the Pound Sterling to Euro (GBP/EUR) exchange rate. The Euro (EUR) also lacks much drive though as investors await more key Eurozone data.
Still, GBP/EUR has been able to recover last week’s modest losses at least so far.
GBP/EUR opened this week at the level of 1.1076 and quickly jumped higher. The pair briefly touched on its best level in almost a month yesterday, 1.1146. However GBP/EUR was unable to sustain these highs.
At the time of writing, GBP/EUR trends closer to the level of 1.1113, which is just around last week’s opening levels.
Pound (GBP) Exchange Rates See Little Impact from Gloomy UK Growth Report
Wednesday’s European session saw the publication of Britain’s Q2 Gross Domestic Product (GDP) growth report. The key yearly growth rate printed a contraction of –21.7% rather than the expected 22.4%, but the figure was still concerning.
According to Derrick Dunne, CEO of Beaufort Investment:
‘A 20.4% drop in GDP for Q2 is a spectacular blow after last month’s slight uplift, but wholly expected for figures covering the largest proportion of the lockdown.’
Though UK growth and production stats were slightly less dire than forecast, Q2 business investment was much worse. Business investment contracted at –31.3% year-on-year.
The data ultimately had little major impact on Sterling (GBP). The British currency remains weighed and its potential for further gains limited.
Euro (EUR) Exchange Rates Remain Fairly Steady amid Lack of Fresh Impetus
Investors are hesitant to move too much on the Euro this week. The shared currency remains broadly appealing due to the EU and European Central Bank’s (ECB) handling of the coronavirus pandemic, which has been perceived as effective.
Eurozone data continues to show that the bloc is weathering the pandemic well.
What’s more, compared to UK and US economic jitters, the Eurozone’s outlook has been comparatively more optimistic.
While there have been rising coronavirus cases in some Eurozone nations lately, like Spain, the bloc’s outlook remains optimistic overall. This is keeping the Euro from falling too far even as rival currencies attempt recovery.
Pound to Euro (GBP/EUR) Exchange Rate Awaits Eurozone Growth Report
The Pound to Euro exchange rate has been able to hold most of this week’s gains so far.
Some slightly better than expected UK figures, as well as the Pound’s cheapness, are helping the British currency to hold some modest recovery attempts.
However, the Pound’s outlook remains filled with uncertainties overall. The Pound’s potential for big gains is limited, especially as the Euro outlook is comparatively much more optimistic.
With this week’s notable UK ecostats all published now, GBP/EUR is more likely to be driven by Eurozone data in the coming sessions.
German inflation data and French unemployment stats will be published tomorrow.
Friday’s data will be even more influential, with Eurozone growth and employment stats due to be published.
If Eurozone growth is better than expected and the Eurozone continues to handle the coronavirus pandemic well, the Pound to Euro (GBP/EUR) exchange rate may struggle to hold this week’s gains.