GBP/EUR Exchange Rate Falls as Only One in Four UK Companies are Prepared for Brexit
The Pound to Euro (GBP/EUR) exchange rate dipped this morning, with the pairing currently trading around €1.11.
Fears over Brexit developments are weighing on Sterling today. This follows reports from the Institute of Directors (IoD) of only one in four companies being prepared for Britain’s full departure from the European Union.
Jonathan Geldart, director-general of the IoD, commented:
‘With so much going on, many directors feel that preparing for Brexit proper is like trying to hit a moving target. Jumping immediately into whatever comes next would be a nightmare for many businesses.’
As a result, Sterling traders are remaining cautious today, with a great deal of uncertainty remaining over the UK’s future with the EU.
Meanwhile, GBP investors will be looking ahead to Governor of the Bank of England (BoE) Andrew Bailey’s speech today. Any dovishness about the British economy would weigh on the GBP/EUR exchange rate.
Euro (EUR) Benefits as Concerns Linger Over a Second Wave of Covid-19 Cases
The Euro (EUR) edged higher against the Pound (GBP) today as investors continue to seek out the safe-haven status of the single currency. With fears continuing to grow over a possible second wave of the coronavirus, safe assets like the Euro and the US Dollar are trading higher today.
Nevertheless, there are growing hopes in the markets at the beginning of this week. This follows news that the pharmaceutical company Gilead have hinted at furthering their clinical trials on a Covid-19 vaccine.
As a result, markets are becoming more hopeful that medical science could further alleviate the global economy’s recovery from the pandemic.
David Madden, an analyst at CMC Markets, commented:
‘A study found that Remdesivir, an anti-viral drug produced by Gilead Sciences, reduced the fatality rate by 62%.’
‘The drug in question has been tipped as a potential treatment for the coronavirus for several months, and the findings from the latest study boosted market sentiment.’
In Eurozone economic news, today saw the release of Germany’s Wholesale Price Index for June. With the figure rising from -0.6% to 6% last month, investors have become more optimistic about the Eurozone’s powerhouse economy’s recovery.
GBP/EUR Outlook: Could Rising German Economic Sentiment Boost the Euro?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK industrial and manufacturing production figures for May. Any signs of these remaining in negative territory would prove GBP-negative.
Tomorrow will also see the release of the UK GDP figure for May. If this confirms forecasts and rises to 5%, then we could see the Pound rise.
Euro (EUR) traders will be awaiting tomorrow’s release of the German ZEW Survey for Economic Sentiment in July. Any signs of improvement would buoy the Euro.
The GBP/EUR exchange rate will likely remain subdued this week as the UK’s economic situation remains a key concern. However, any indications that UK-EU trade negotiations could reach a compromise on a free trade deal would benefit Sterling.