Euro to Pound Exchange Rate Under Pressure amid Mixed Market Sentiment
While the Euro (EUR) outlook remains fairly appealing, the Euro to Pound Sterling (EUR/GBP) exchange rate slipped again today. A lack of fresh support for the Euro in recent sessions, combined with a recovering US Dollar (USD), made it easier for Euro rivals to rise.
The mixed movement of EUR/GBP continues. Last week saw EUR/GBP climb from 0.8913 to 0.8976. This week so far the pair has seen both ups and downs, though since yesterday EUR/GBP has been trending with a downside bias.
At the time of writing, EUR/GBP is trending in the region of 0.8948.
Looking ahead, central bank news and further coronavirus developments will drive both currencies. In particular, tomorrow’s Bank of England (BoE) news could be influential.
Euro (EUR) Exchange Rates Little-Impacted by Inflation, but Rival Strength Weighs
This week’s news has thus far had little impact on the Euro. Instead, the shared currency has been driven more by strength in rival currencies, like the US Dollar (USD).
The US Dollar is the Euro’s biggest rival. As investors are gradually finding the US Dollar more appealing again, the Euro has been slightly hit by the negative correlation the currencies share.
The Euro outlook remains fairly optimistic overall though, thanks to the European Central Bank’s (ECB) sweeping monetary policy to combat the coronavirus. In reaction to today’s low Eurozone inflation stats, Neil Birrell from Premier Biton said:
‘Following the benign inflation data from the UK, it was the same story in the eurozone but is not something to concern the European Central Bank. There had been signs of some inflation prior to the crisis, but they have disappeared. As with everywhere else, policy measures are potentially inflationary, but that’s a problem for the future, not now.’
Pound (GBP) Exchange Rates Lack Drive to Advance amid Lingering Uncertainties
This week’s UK data has done little to offset concerns about the coronavirus pandemic’s impact on Britain’s economy.
UK job stats beat forecasts but contained details worsening concerns that the job market will see months more weakness. The latest inflation data came in close to expectations, and analysts also believe inflation will remain weak all year.
The UK government’s handling of coronavirus and Brexit remain concerns for analysts and are keeping the Pound under pressure. According to Yohay Elam, Analyst at FXStreet:
‘The UK’s coronavirus curve is moving down – yet frustratingly slowly. The government is loosening the lockdown at a snail’s pace in comparison to its peers at the continent and demands a 14-day quarantine on incoming visitors– all but killing the tourism sector.
Despite Prime Minister Boris Johnson’s optimism about accelerating Brexit talks – or ‘putting the tiger in the tank’ in his words – talks may drag on for longer. According to a report in Germany, negotiations will only heat up after the summer.’
Euro to Pound (EUR/GBP) Exchange Rate Focuses on Bank of England (BoE) Decision
Tomorrow could be the most influential session of the week for Pound investors. The Bank of England (BoE) will hold its June policy decision. Any surprising shifts from the bank could have a big impact on the Pound’s outlook.
It is expected that the BoE will discuss further quantitative easing (QE) policy. However, the big question is whether or not the bank will make any indications regarding negative interest rates.
Any signs that negative rates are on the table could lead to huge Pound losses. Sterling has more chance of recovering if the BoE is more optimistic than expected on Britain’s economy.
As for the Euro, there is no notable Eurozone data due tomorrow. Euro movement will instead be driven more by rival strength and coronavirus developments over the coming days.
Euro to Pound (EUR/GBP) exchange rate investors will be closely watching developments regarding the Bank of England, coronavirus pandemic, and Brexit.