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Euro Pound (EUR/GBP) Exchange Rate Edges Higher Ahead of EU Leaders Meeting

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Euro Pound Sterling (EUR/GBP) Exchange Rate Rises on EU Stimulus Optimism

The Euro Pound Sterling (EUR/GBP) exchange rate edged 0.2% higher on Friday morning. This left the pairing trading at around £0.9086.

The single currency was largely supported by hopes European leaders would agree on fiscal stimulus measures.

The bloc’s leaders are due to meet in Brussels for a two-day Special European Council to discuss the bloc’s coronavirus recovery plan.

The European Commission has proposed a €1.1 trillion budget plus a €750 billion recovery fund which is aimed at helping to economies most affected by the coronavirus crisis.

The stakes are high as the crisis has caused huge damage to the bloc and the short-term measures supporting the labour market are due to expire soon.

Italy’s economy minister has said he will fight any efforts from the ‘Frugal Four’ to water down the bloc’s proposed €750 billion recovery fund.

Speaking to Italian newspaper, Corriere della Sera, Roberto Gualtieri said:

‘It is crucial to close EU negotiations over the recovery fund as soon as possible, if possible already in this European council.

‘We will fight hard not to modify these elements.

‘There are also some critical points in that proposal on which we will be very determined.’

Pound (GBP) Slides as Coronavirus Worries Dominate

Meanwhile, Sterling remained under pressure as Friday saw worries about the coronavirus crisis remerge. The lack of economic data left GBP traders to react to the current risk-on mood amongst markets.

Traders flocked to safe-haven currencies such as the US Dollar (USD) on signs that the virus is starting to curb economic activity.

Some investors have noted they are starting to see troubling signs in recent data. The new surge in coronavirus infections is threatening the US economy.

California, yet another US state has partially shut down, which has increased fears the economy will continue to struggle. This weighed on the riskier Pound.

GBP still remained under pressure after Thursday saw the currency slide as data sparked fears the current fiscal stimulus would not be enough to support the economy.

Thursday’s data revealed that the number of employees on company payrolls fell by 649,000 between March and June.

Rony Nehme, chief market analyst at financial research firm Squared Financial noted:

‘We still believe going forward the UK faces issues and think the economy will fare worse than others in Europe.’

Euro Pound Outlook: EU Leaders Meeting in Focus

Looking ahead, traders will be eagerly watching the EU leaders meeting on the bloc’s coronavirus recovery plan. This could allow the Euro (EUR) to make gains against the Pound (GBP).

If the bloc’s officials are able to reach a compromise on the recovery fund, it will buoy the single currency.

Meanwhile, the Pound could suffer losses following the release of the latest GfK consumer confidence.

If flash confidence does not rise as high as expected, it will weigh on Sterling and send the Euro Pound (EUR/GBP) exchange rate higher.

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