(EUR/GBP) Exchange Rate Rangebound as Coronavirus News Stifles Reopening Optimism
The Euro Pound (EUR/GBP) exchange rate is rangebound today as the UK braces for ‘Freedom Day’ amidst rising concerns over covid cases. A variety of conflicting data has muted significant movements in the currency pair.
At the time of writing, the Euro trades at £0.8547, virtually unchanged from today’s opening levels.
Pound (GBP) Gains are Limited as Experts Stress the Pandemic Isn’t Over
The Pound (GBP) is trading level with the Euro (EUR) this morning as fresh covid worries put a dent in previously positive Sterling sentiment.
The UK’s Chief Medical Officer, Chris Whitty, remarked yesterday evening that the number of people in hospital with COVID-19 is doubling around every three weeks and could hit ‘quite scary numbers’.
Whitty’s comments follow cautious language from Prime Minister Boris Johnson, who has stressed that post-‘freedom day’, ‘mask wearing [will] be expected in enclosed spaces and that ‘high risk’ venues such as nightclubs should make use of voluntary covid passports.’
Today’s bearishness follows an uptick in GBP trading yesterday after Bank of England (BoE) MPC Committee Member Michael Saunders said that if the economy continues on its current path then the central bank may need to begin tapering bond purchases ‘fairly soon’.
Euro (EUR) Flat as Eurozone Inflation Prints in Line with Expectations
The Euro (EUR) struggled to find support this morning, as the Eurozone’s consumer price index printed at predicted levels, with inflation slowing to 1.9% last month, down from a 2½ -year high of 2% in May.
The single currency has been subdued recently by dovish forward guidance from the European Central Bank, as both the Federal Reserve and Bank of England switch to a hawkish outlook. Meanwhile, ECB President Christine Lagarde affirms that the central bank will preserve sustainable financial conditions and ‘that now it’s not the right time to talk about an exit strategy.’
Asymmetric economic recovery across the EU also stunts the Euro’s progress as different regions report growing coronavirus cases amidst confusion after the continent decided to reopen. Recent infections have forced new restrictions, throwing vacation plans into disarray.
EUR/GBP Forecast: Rangebound Theme to End with GBP Gains?
The European Central Bank’s interest rate decision next Thursday is likely to drive the EUR/GBP exchange rate going forwards. The ECB is expected to leave interest at 0%, playing it safe as other central banks look to revise monetary policy: however, forward guidance is expected to be clearer than previously, expanding on last week’s strategy review.
Movement could also be driven by the Bank of England’s (BoE) forward guidance on Monday, via Jonathan Haskel’s scheduled speech. German PPI data may also inspire movement in the currency pairing.