Euro Pound (EUR/GBP) Exchange Rate Fluctuates as Coronavirus Worries Persist
The Euro Pound (EUR/GBP) exchange rate is under pressure today from ongoing Covid concerns, which overshadows positive German data and high economic sentiment in the Eurozone.
At the time of writing, the Euro trades at £0.8502, extending this morning’s losses.
Euro (EUR) Under Pressure despite Positive Data
The Euro is trending lower against the Pound (GBP) today as coronavirus concerns continue to affect the single currency. Despite better-than-expected German unemployment data and strong economic sentiment in the Euro area, EUR trading sentiment remains bearish.
Germany reported 91,000 fewer unemployed individuals in July – a huge step up from the 28,000 expected. This marks the third straight month of falling unemployment, as ‘companies are increasingly looking to hire new staff’.
In addition, the economic sentiment indicator for the Euro area printed at 119, exceeding estimates by half a point and signalling an all-time high. Today heralds the sixth consecutive month of rising sentiment, with morale among service providers the strongest it’s been since August 2007.
The Euro has yet to capitalise on these supportive factors, however; perhaps because due to fears that the Delta variant could disrupt the bloc’s economic progress as well as its summer tourism season.
Low consumer confidence in the Eurozone reflects investors’ caution, as July’s -4.4 figure printed down from a previous three-and-a-half-year high. Households’ assessment of the economic situation and their future financial conditions worsened, along with intentions to make major purchases.
Pound (GBP) Climbs against Euro (EUR) in Spite of Covid Spike
The Pound is resisting downside pressure this afternoon, despite yesterday’s Covid data showing a rise in infections.
The number of positive coronavirus tests had been falling steadily for a week, which encouraged optimism in the UK’s recovery. Infections rose yesterday by 4,000 cases, however, baffling health officials and scientists.
‘We don’t know exactly what’s going on’, remarked Professor Tim Spector of the ZOE Symptom Study app; ‘[we’re] just very suspicious of these dramatic changes and how they’ve occurred.’
So far today, GBP investors seem unfazed by the rise. News that the UK will scrap quarantine rules for fully jabbed EU and US travellers may have bolstered GBP sentiment, as analysts predict it will boost the UK’s tourism industry.
In addition, the UK government is remaining cautiously optimistic. Boris Johnson has confirmed 16 August as the date when quarantine will be scrapped for double-jabbed adults in England, as this was the one element of the government’s unlocking ‘roadmap’ that did not go ahead on 19 July.
EUR/GBP Exchange Rate Forecast: Euro to Rise on Tomorrow’s Data?
Tomorrow is a big day for Eurozone releases, as Germany’s GDP growth rate is due alongside GDP and inflation data for the Euro area.
If the data impresses, the Euro is likely to see some support and may stage a comeback against the Pound.
Meanwhile, no more data is due out of the UK, which may leave Sterling open to losses- particularly if Covid case numbers continue to climb. Will the UK’s recent optimism persist?