Euro to Pound Exchange Rate Awaiting Eurogroup Meeting on Fiscal Stimulus
The Euro to Pound Sterling (EUR/GBP) exchange rate has been unable to hold its ground this week. Lingering market risk-sentiment is helping the Pound (GBP), while the Euro (EUR) lacks drive due to concerns over a lack of coordinated fiscal stimulus action in the Eurozone.
Improving market sentiment and EU fiscal stimulus jitters have kept pressure on EUR/GBP since late-March. Last week saw EUR/GBP shed a pence and a half as the Euro kept struggling to find any solid ground.
This week’s movement has been narrower in comparison. EUR/GBP has still seen fairly notable losses however. Since opening this week at the level of 0.8803, EUR/GBP has lost around a third of a pence and currency trends in the region of 0.8772.
The biggest focus for Euro investors today is another upcoming Eurogroup meeting. Any notable developments on fiscal stimulus have the potential to drive the Euro to Pound exchange rate through the end of the week.
Euro (EUR) Exchange Rates Await Coronavirus Fiscal Stimulus Developments
The Euro has been among the least appealing major currencies this week. It has been unable to benefit from shifts in market sentiment. While it had previously benefitted from safe haven demand, concerns over EU fiscal stimulus have dampened this appeal.
Instead, the Euro remains under pressure. Investors are waiting for more solid developments in EU fiscal response to the coronavirus pandemic before making bigger moves on the Euro.
Earlier in the week, Eurozone finance ministers in the Eurogroup met to discuss the bloc-wide fiscal policy. However, the meeting ultimately disappointed as no major agreements were reached.
The Eurogroup is meeting again today. Still, with the same divisions between EU nations persisting, investors are uncertain if much progress will be made. According to Jim Reid, Strategist at Deutsche Bank:
‘It seemed that once again, the traditional dividing lines between north and south that dominated in the European sovereign debt crisis were at the forefront,’
Pound (GBP) Exchange Rates Benefitting from Risk-Sentiment despite Uncertainties
UK Prime Minister Boris Johnson has been in hospital on coronavirus symptoms since Monday. However, Mr Johnson’s condition has reportedly stabilised. This is boosting hopes for a smooth recovery.
With market uncertainty over the PM’s health and the government’s stability softening, the Pound is more appealing again.
Sterling has been one of the currencies benefitting strongly from calming market conditions lately. This appeal persists even amid uncertainties.
Even today’s news that the Bank of England (BoE) would cooperate with the UK government on financing didn’t hurt the Pound much.
According to Analysts from ING:
‘On another occasion, today’s news that the Bank of England would be directly financing the government would be taken as a GBP negative. However, one suspects that many countries will be pursuing the same path shortly.’
Euro to Pound (EUR/GBP) Exchange Rate Awaits Eurogroup Meeting
Today’s Eurozone and UK data was largely overlooked, as the coronavirus pandemic continues to dominate markets.
Perhaps the biggest potential coronavirus development on the way is more news from the Eurogroup. Another meeting of Eurozone finance ministers will take place today.
If there are any optimistic developments regarding Eurozone fiscal stimulus, the Euro could see stronger support. This may help EUR/GBP to recover some of this week’s losses.
On the other hand though, continued disagreement between EU nations will keep the Euro under pressure. This would make it more likely for Sterling to sustain gains or climb further.
Pound investors are becoming less anxious about the condition of UK Prime Minister Boris Johnson, but changes here could still cause some movement.
With a long weekend ahead amid Easter bank holidays, the Euro to Pound (EUR/GBP) exchange rate is likely to remain driven by market sentiment and coronavirus developments.