Pound to Euro Exchange Rate Jittery with Both Currencies Weakening
The Pound Sterling to Euro (GBP/EUR) exchange rate is becoming more volatile today. Following some disappointing UK and Eurozone data, investors are now awaiting what could be major Brexit developments in the coming sessions.
Last week saw the Euro (EUR) benefitting from rival weakness, and GBP/EUR fell slightly throughout the week. GBP/EUR opened last week at 1.1040 and closed just slightly lower at 1.1028. The pair was able to recover from a fortnight low of 1.1092.
This week so far though, GBP/EUR has been trending with an upside bias instead. This morning, GBP/EUR touched on a high of 1.1077 – the best level for the pair in a month.
Global political and coronavirus uncertainty remains high. Both the Pound (GBP) and Euro are likely to be jittery as investors await developments in these issues.
Pound (GBP) Exchange Rates Hit by Concerning UK Job Market Report
The Pound struggled to capitalise on Euro weakness today, as its appeal was limited by poor UK data.
This morning saw the publication of Britain’s August job market report. It showed that far more UK jobs were lost than expected throughout the month. This indicated that the coronavirus pandemic has hit UK jobs worse than feared.
Rather than worsening slightly to the forecast 4.3%, Britain’s key unemployment rate instead jumped from 4.1% to a concerning 4.5%.
There are concerns that UK job layoffs may get even worse towards the end of the year, as Britain sees fresh coronavirus restrictions. Brexit uncertainties are only making the Pound even more jittery on top of coronavirus concerns.
Euro (EUR) Exchange Rates Hit by German and Eurozone Economic Concerns
Despite the Pound’s weakness today, the Euro was unable to push GBP/EUR lower. This was due to various factors weakening the Euro outlook.
Today’s Eurozone data disappointed investors. While German inflation stats met expectations, German and Eurozone economic sentiment stats from ZEW were disappointing.
Germany’s economic sentiment index was expected to have worsened slightly to 73, but the figure instead fell to just 56.1. The Eurozone figure also came in with a worse than expected 52.3.
According to Achim Wambach, ZEW’s President, this was due to coronavirus and Brexit fears in the Eurozone:
‘The recent sharp rise in the number of COVID-19 cases has increased uncertainty about future economic development, as has the prospect of the UK leaving the EU without a trade deal.’
On top of weak Eurozone data, the Euro was also weaker due to a rebound in demand for its rival, the US Dollar (USD).
Pound to Euro (GBP/EUR) Exchange Rate May Remain Jittery until Brexit Developments
The Pound to Euro exchange rate is volatile as global political uncertainties are keeping both currencies jittery this week.
Investors may remain hesitant to move on the Pound until there is some more solid development in Brexit. There are still fears that UK-EU Brexit negotiations could collapse this week, which would lead to huge GBP/EUR losses.
However, markets generally expect there to be no notable Brexit developments overall, which could keep the Pound range-bound.
As for the Euro, its movement is also limited by political uncertainty. If US political uncertainty continues to worsen, the Euro could be weakened by safe haven demand boosting its rival the US Dollar (USD).
Upcoming comments from European Central Bank (ECB) President Christine Lagarde could also influence the Pound to Euro exchange rate in the coming sessions.