GBP/EUR Exchange Rate Rangebound as European Economies Cautiously Reopen
The Pound to Euro (GBP/EUR) exchange rate is flat today, with the pairing currently trading around €1.148.
The Euro (EUR) held steady against the Pound (GBP) today despite European new car sales plunging by -51.8% in March due to the spread of the coronavirus.
The European Automobile Manufacturers Association (EAMA) said:
‘All 27 EU markets contracted in March, but Italy took the biggest hit, with registrations falling by 85.4% to 28,326 new cars.’
Euro (EUR) investors are remaining cautiously optimistic as coronavirus rates continue to fall throughout Europe, with a number of countries also easing their lockdown measures in efforts to recover their respective economies.
Europe’s Covid-19 hotspots – Italy and Spain – have managed to get a handle on infection rates after a moth of strict lockdown procedures. The World Health Organisation’s director for Europe, Dr Hans Kludge, describing these developments as an ‘optimistic sign’.
However, with concerns rising that some European nations appearing to be ignoring guidelines from the European Commission, the European Union’s unity is once again being called into question. Consequently, these anxieties left the EUR/GBP exchange rate flat this morning.
Pound (GBP) Steady as No-Deal Brexit Fears Return
The Pound (GBP) remained subdued today after yesterday saw no-deal Brexit fear return after Downing Street bluntly refuse any possibility of an extension to the Brexit transition period beyond the 31st December deadline.
A spokesperson for Number 10 said on Thursday:
‘We will not ask to extend the transition. And, if the EU asks, we will say no.’
‘[E]xtending the transition would simply prolong the negotiations, prolong business uncertainty, and delay the moment of control of our borders. It would also keep us bound by EU legislation at a point when we need legislative and economic flexibility to manage the UK response to the coronavirus pandemic.’
Meanwhile, Sterling also continues to struggle on the absence of Prime Minister Boris Johnson as we head into the weekend, with the lack of a clear figurehead leading government leaving some GBP investors felling jittery.
Additionally, Foreign Secretary Dominic Raab’s announcement of an extension to the UK’s nationwide lockdown for ‘at least’ another three weeks has left markets concerned for the British economy going forward.
Mr. Raab said in yesterday’s briefing that Britain does not yet ‘have the infection rate down as far as we need to’ in order to ease lockdown restrictions.
GBP/EUR Forecast: Covid-19 and Brexit to Drag Down Sterling?
The Euro (EUR) will continue to remain sensitive to coronavirus developments throughout Europe, with any signs of numbers dropping in large nations like Germany and France proving EUR-positive as the Eurozone’s powerhouse economies being to take cautious steps towards recovery.
The GBP/EUR exchange rate will likely remain subdued into the weekend and beyond as the UK is being held back by two levels of uncertainty, with rising anxieties over both Brexit and the coronavirus likely to drag down Sterling.