EUR/GBP Exchange Rate Steady as ECB Warns of Bumpy Ride for Eurozone Economy
The Euro to Pound (EUR/GBP) exchange rate held steady today. The pairing is currently fluctuating around €0.908 despite Germany Factory Orders beating forecasts in August and rising by 4.5%.
Germany’s Economy Ministry commented on the report:
‘The catch-up in factory orders continues at remarkable speed. It’s supported primarily by demand from abroad.’
Meanwhile, today saw the European Central Bank’s (ECB) Christine Lagarde warn that the Eurozone’s economy is in for a bumpy ride for the next few months.
Lagarde said at an event hosted by the Wall Street Journal:
‘While we have seen recovery in late spring, early summer, we now fear that the containment measures that have to be taken by the authorities will have an impact.’
As a result, EUR investors are remaining cautious as the Covid-19 infection rate continues to grow throughout Europe.
Spain’s economy is also becoming an increasing concern or the Eurozone as a second wave of Covid-19 threatens yet more devastation.
Pound (GBP) Steady as UK Brexit Hopes Appear to be Getting ‘Closer and Closer’, According to EU Source
The Pound (GBP) failed to rise today despite diplomats in Brussels saying that a deal between the UK and the EU was getting ‘closer and closer’.
A sourced briefed by the European Commission said:
‘We seem to be getting closer and closer to a deal, even though the no-deal rhetoric in public might suggest the opposite.’
In UK economic news, today saw the release of September’s UK Construction PMI, which beat forecasts and rose from 54.6 to 56.8.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, commented on the data:
‘UK Construction took off in September, soaring ahead of both the manufacturing and service sectors in terms of output growth and recording the fastest rise in purchasing activity since October 2015.’
However, with the UK economy set for more uncertainty in the months ahead, this was not enough to boost the GBP/EUR exchange rate.
EUR/GBP Outlook: Could Brexit Deal Hopes Buoy Sterling?
Euro (EUR) investors will be awaiting tomorrow’s release of August’s German Industrial Production report.
Any improvement in the Eurozone’s largest economy would prove EUR-positive.
Tomorrow will also see another speech from the ECB’s President Christine Lagarde.
If she continues to be notably downbeat about the Eurozone’s economic performance in the months ahead, the EUR/GBP exchange rate would suffer.
Sterling traders will be eyeing Brexit developments this week. Any signs of UK-EU relations converging on a possible post-Brexit trade deal would boost the Pound.
The EUR/GBP exchange rate will remain sensitive to Europe’s coronavirus situation this week. If the infection rate continues to grow, then the pairing could begin to sink.