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Pound to Euro (GBP/EUR) Exchange Rate Steady as Rishi Sunak Reveals Summer Statement to Recover UK Economy

July 8, 2020 - Written by John Cameron

GBP/EUR Exchange Rate Rangebound as Hopes Grow for British Economy

The Pound to Euro (GBP/EUR) exchange rate held steady today, with the pairing currently trading around €1.11.

Sterling failed to gain against the Euro (EUR) today after Chancellor Rishi Sunak revealed that he would cut VAT on tourism and hospitality by 5% until January. As a result, investors are becoming more optimistic that these two sectors could recover in the months ahead.

Meanwhile, Mr Sunak’s announcement of a Stamp Duty holiday on properties sold for less than £500,000 has been reported as a boon for the housing market.

Mark Peck, head of residential at estate agent Cheffins, commented:

‘The most likely impact of this measure will be a flood of buyers coming into the market who previously had sat on their hands due to political and economic uncertainty, and this flurry of activity will bring with it price rises as demand outweighs supply. However, it will also be a stimulant for those considering selling as people look to make the most of a buoyant market during the tax holiday.’

However, post-Brexit concerns are weighing on Sterling today after German Chancellor Angela Merkel called for the European Union to ramp up its preparations for trade talks.

Consequently, investors are becoming increasingly concerned that the UK and the EU could fail to come to consensus by the end of the year.

Euro (EUR) Steady as Reports of the Eurozone’s Deep Recession Weigh on the Single Currency

The Euro (EUR) struggled today after it was reported that the Eurozone could be facing a deeper recession than previously forecast.

Valdis Dombrovskis, the Executive Vice President of the European Commission, commented:

‘The economic impact of the lockdown is more severe than we initially expected.’

‘We continue to navigate in stormy waters and face many risks, including another major wave of infections.’

The European Commission also projected that the Eurozone’s economy could plunge by 8.7% in 2020 due to the coronavirus crisis. As a result, single currency traders are becoming increasingly skittish as the bloc’s economy continues to struggle.

GBP/EUR Outlook: Could Improving German Export Figures for May Boost the Euro?

Euro (EUR) investors will be looking ahead to tomorrow’s release of the German trade balance figures or May. Any signs of an increase in the Eurozone’s largest economy’s exports could buoy the single currency.

Tomorrow will also see the Eurogroup meeting which will be attended by the Eurogroup President and the Finance Minister of each member state. However, any dovish comments about the Eurozone’s economy could prove EUR-negative.

The GBP/EUR exchange rate will continue to be driven by Brexit developments this week. If UK-EU trade negotiations progress, then we could see the Pound benefit.
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