Pound to Euro Exchange Rate Lacks Solid Drive after Week of Mixed UK Data
The Pound Sterling to Euro (GBP/EUR) exchange rate was attempting to edge higher on Friday morning, ahead of a key Eurozone growth report. However, the Pound’s (GBP) potential for gains is limited, even amid some fresh optimistic Brexit speculation.
After opening this week at the level of 1.1076, GBP/EUR spent around half of the week higher. GBP/EUR touched on a monthly best level of 1.1148 earlier in the week, but slumped on Wednesday evening.
Since then, GBP/EUR has been floundering lower. At the time of writing on Friday, GBP/EUR is attempting a rebound and is trending a little closer to the week’s opening levels.
Amid a lack of big shifts in the Pound or Euro (EUR) outlooks this week, investors still await big coronavirus or Brexit developments.
Sterling (GBP) Exchange Rates Struggle despite Brexit Speculation
The Pound has seen broadly mixed movement this week.
Most of this week’s key UK data, including job stats and growth rate results, beat forecasts. However, due to the damage of the coronavirus pandemic on Britain’s economy, the data’s figures alone were not enough to paint the whole picture.
UK growth was a little better than expected but the nation’s contraction was still notably worse than most other major economies.
Sterling also found a little support on the latest Brexit speculation. Irish Prime Minister Micheal Martin said yesterday that he believed a UK-EU Brexit deal could be reached.
Sterling attempted to gain against weaker rivals like the US Dollar (USD) due to the growth stats, as well as Brexit speculation, but its gains against the more resilient Euro have been limited.
Euro (EUR) Exchange Rates Remain Resilient despite Coronavirus Jitters
The number of coronavirus cases in the Eurozone has been rising in recent weeks. Cases in Spain and Germany have been on the up, worsening concerns that the Eurozone could be hit by a ‘second wave’.
Despite this though, the Euro remains broadly appealing overall. The EU and European Central Bank’s (ECB) handling of the pandemic so far has been positively received. Compared to other major economies, markets are more optimistic about the Eurozone.
This week’s Eurozone data has been enough to keep hopes of a resilient Eurozone buoyed. This morning’s French inflation data met forecasts, coming in at 0.8%
Pound to Euro (GBP/EUR) Exchange Rate Could Sustain Gains if Brexit Hopes Rise
The Pound to Euro exchange rate is attempting a rebound today, but the Pound’s potential for gains is limited.
Concerns about deeper UK lockdown amid a ‘second wave’ persist, as do concerns about UK-EU Brexit negotiations.
However, if the recent optimism from some officials over Brexit leads to progress, the Pound could surge.
Investors are anxious that UK-EU negotiations will fail and lead to a no-deal Brexit. If there are developments any time soon, the Pound will see a much more solid jump in demand.
Still, the Euro is likely to remain resilient and appealing. The Eurozone economic outlook is still faring better than UK and US outlooks amid the coronavirus pandemic.
Unless upcoming Eurozone data shows a sudden shift or there are major new Eurozone lockdowns, the Pound to Euro (GBP/EUR) exchange rate may struggle to advance much against a sturdy Euro.