EUR/GBP Exchange Rate Rangebound as ECB Sparks Concerns Over Economic ‘Uncertainty’
The Euro to Pound (EUR/GBP) exchange rate held steady today, with the pairing currently trading around £0.917.
The Euro (EUR) is rangebound again the Pound (GBP) today after Christine Lagarde, the President of the European Central Bank (ECB), urged the bank to ‘very carefully’ assess the Eurozone’s economic data as the bloc struggles to recover.
Lagarde said in a speech to the Franco-German Parliamentary Assembly:
‘The uncertainty of the current environment requires a very careful assessment of the incoming information, including developments in the exchange rate.’
‘The strength of the recovery remains very uncertain, as well as uneven and incomplete. It continues to be highly dependent on the future evolution of the pandemic and the success of containment policies.’
Consequently, EUR investors are remaining cautious as the Eurozone’s economic future remains uncertain.
Furthermore, with rising Covid-19 cases throughout Europe, single currency investors have a lot to feel jittery about as we approach winter.
Pound (GBP) Steady as UK Markets Remain Cautious as Nation ‘Turns a Corner’ on Coronavirus Pandemic
The Pound (GBP) struggled today as concerns over tighter UK lockdown restrictions continue to grow. This follows an announcement from one of Downing Street’s top scientific advisors, Professor Chris Witty, who warned that the UK had ‘turned a corner’ for the worse as Covid-19 cases rise.
Another influential scientific adviser, Sir Patrick Vallance, said:
‘We have in a bad sense, literally turned a corner, although only relatively recently. At this point, the seasons are against us, we are now going into the seasons, late autumn and winter, which benefit respiratory viruses and it is very likely they will benefit Covid as they do flu.’
As a result, UK markets have become increasingly jittery as the prospect of a second Covid-19 lockdown would severely compromise the British economy.
Prime Minister Boris Johnson’s spokesman said on Sunday:
‘The PM will work with his colleagues to ensure that we respond in the most effective way to try to control the spread of the virus and to save lives.’
EUR/GBP Outlook: Could Brexit and the Coronavirus Darken the Bank of England’s Economic Outlook?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the Eurozone’s latest Consumer Confidence report. Any signs of this improving in September would prove EUR-positive.
EUR traders will also be paying close attention to Fabio Panetta, a member of the European Central Bank’s (ECB) executive board, who is scheduled to deliver a speech tomorrow afternoon.
Any dovishness about the Eurozone’s economic recovery, however, would drag down the single currency.
Pound (GBP) investors will be awaiting tomorrow’s speech from Andrew Bailey, the Governor of the Bank of England (BoE).
If he is notably downbeat about the UK’s economic future – with Brexit and coronavirus threatening to derail the nation’s recovery – then we would see the EUR/GBP exchange rate rise.