EUR/GBP Exchange Rate Falls as Confidence Grows in UK Economy
The Euro Pound exchange rate fell by 1% today after the UK downgraded its Covid-19 threat level from 4 to 3, highlighting the success of vaccinations and social distancing. The pairing is currently fluctuating around £0.86.
Sterling has continued to rise today thanks to growing optimism in the UK economy.
NHS England national medical director, Prof Stephen Powis, however expressed caution about the UK’s Covid-19 situation, saying:
‘Covid is still circulating with people catching and spreading the virus every day so we all need to continue to be vigilant. This remains a major pandemic globally.’
In UK economic news, today saw house prices increase at their fastest rate in 5 years, buoying confidence in the nation’s economy as lockdowns are due to further ease on 17 May.
Today also saw news that the economic think tank NIESR had raised its growth forecast for the UK in 2021. NIESR was mixed in its report, highlighting the risks of resulting inequality in the long-term:
‘Following the worst economic performance among G7 countries in 2020, optimism about the UK recovery is broad-based and well-founded.’
‘The long-term challenges of low wage growth, slow productivity and inequalities across regions and between groups of people have not been resolved by Covid-19; indeed, the risk is that they have been exacerbated.’
Euro (EUR) Exchange Rate Sinks Despite Upbeat Consumer Confidence
The Euro (EUR) fell today despite this morning’s publication of the latest Eurozone Sentix Investor Confidence for May. The figure beat forecasts and rose to 21.
Sentix commented on the data:
‘This is very unusual and underlines that the very expansive monetary and fiscal policy that has been in place for a year has not failed to have an effect on the real economy.’
As a result, EUR investors are becoming steadily more confident about the outlook for the Eurozone’s economy, despite the lag on Covid-19 vaccinations within the European Union (EU) earlier this year.
European Central Bank (ECB) Chief Economist Philip Lane also commented that the Eurozone’s economy would return to 2019 by the spring of 2022.
Mr Lane warned that the road to recovery ‘will be long’ but added that the ‘economy is to grow rapidly’.
Euro Pound (GBP/EUR) Exchange Rate Outlook: Could Sterling Continue to Rise on UK Economic Optimism?
Euro (EUR) traders are looking ahead to tomorrow’s release of the latest German ZEW survey of economic sentiment for May.
Any improvement in the outlook for the Eurozone’s largest economy would be EUR-positive.
Tomorrow will also see the release of the Eurozone’s ZEW survey of economic sentiment. If the outlook improves for the bloc then the EUR/GBP exchange rate could begin to claw back some of its losses.
The Euro to Pound (EUR/GBP) exchange rate could continue to fall this week, however, if the outlook for the UK economy continues to improve.