EUR/GBP Exchange Rate Falls as Risk-On Markets Holds Back Single Currency
The Euro to Pound (GBP/EUR) exchange rate fell by 0.4% today, with the pairing currently trading around £0.88.
The Euro (EUR) suffered today as risk-on markets meant that investors had flocked to riskier-assets. This follows the announcement that the US biotech firm, Novavax, had begun trials on human subjects for its experimental Covid-19 vaccination.
In Eurozone economic news, today’s release of Germany’s GfK consumer confidence survey for June, which improved slightly from -23.1 to -18.9, left many single currency traders feeling gloomy.
With the Eurozone’s largest economy continuing to struggle, the outlook for the bloc looks increasingly bleak.
Rolf Bürkl, the GfK Consumer Expert, commented:
‘The gradual opening of many businesses has certainly contributed to the propensity to consume not having to take any further hits and increases even slightly at the present time.’
However, with the German economy’s outlook expected to get worse before it gets better, the EUR/GBP exchange rate has remained subdued today.
Pound (GBP) Rises as BoE Says Negative Interest Rates are Not ‘Remotely’ Being Considered
The Pound (GBP) edged higher after the Bank of England’s (BoE) chief economist, Andy Haldane, said that the bank was not ‘remotely’ considering taking the UK’s interest rates into negative territory.
Mr. Haldane also commented that the UK’s recent economic data was a ‘shade better’ than the scenario published by the BoE earlier in May.
However, following the weekend’s controversy over UK Prime Minister Boris Johnson’s aide, Dominic Cummings, have since faded away from investors’ attentions. Instead, Sterling traders are focusing ahead to UK-EU Brexit discussions which are due to take place at the beginning of June.
In UK economic data, today saw the release of the CBI’s distributive trades survey for May, which confirmed consensus and remained in the doldrums at -50%.
Analysts at Reuters reported:
‘Eight out of 10 British retailers reported cash flow difficulties this month as sales dropped sharply again during the coronavirus lockdown…’
‘The Confederation of British Industry’s (CBI) monthly gauge of retail sales rose to -50 from in May from a joint record low of -55 in April, as expected in a Reuters poll of economists.’
EUR/GBP Outlook: Could a Dovish ECB Send the Euro Plummeting?
Euro (EUR) traders will be awaiting tomorrow’s speech from the European Central Bank’s President, Christine Lagarde. However, if she is notably downbeat about the Eurozone’s economy, we could see the single currency suffer.
Tomorrow will also see the publication of the EU Financial Stability Review. As a result, we could see the Euro (EUR) suffer from a bleak report for the bloc’s economic stability going forward.
However, the EUR/GBP exchange rate could edge higher if the Eurozone’s economy shows faster-than-expected recovery this week. With a number of the bloc’s larger economies reopening following the peak of the coronavirus, this could prove positive for the bloc’s economic recovery.