August 28, 2020 - Written by John Cameron
STORY LINK Pound to Euro (GBP/EUR) Exchange Rate Steady as German Confidence Shrinks for September
GBP/EUR Exchange Rate Rangebound as ‘Corona-Related Restrictions’ Drag on Single Currency
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently trading around €1.115.
The Euro (EUR) struggled to gain on Sterling following this morning’s release of the latest German GfK consumer confidence gauge for September, which fell below forecasts from -0.2 to -1.8. As a result, EUR investors have become worried for the Eurozone’s largest economy.
Rolf Buerkl, GfK Consumer Expert, commented on the report:
‘Rising infection rates and the fear of a tightening of corona-related restrictions are causing uncertainty and therefore depressing the mood.
‘Whether this is only a temporary slowdown depends above all on how the rate of infections develops and the measures to be taken by politicians.’
Meanwhile, news of face masks becoming mandatory outside in Paris has also weighed on confidence in the single currency. According to public health figures released last night, 6,111 new Covid-19 cases have been reported in the last 24-hours.
Consequently, EUR investors are remaining cautious as France – the Eurozone’s second-largest economy – continues to struggle with the coronavirus pandemic.
Pound (GBP) Rangebound as UK is Told it is ‘Safe’ to Return to Workplaces
The Pound (GBP) remained subdued this morning despite the UK being told that it is now ‘safe’ to return to workplaces by the UK’s Transport Minister, Grant Shapps.
Mr Shapps told Sky News:
‘What we’re saying to people is it is now safe to go back to work and your employer should have made arrangements which are appropriate to make sure that it is coronavirus-safe to work and you will see some changes if you haven’t been in for a bit as a result.
‘The vast majority of employers just want to get their businesses back up and running, they want to do the right thing, and many will have found that actually home working can work for some of their employees.’
Meanwhile, Brexit remains an issue for UK markets despite reassurances from David Frost, the UK’s Chief Negotiator, that the Government was pushing for a September UK-EU withdrawal agreement.
Nevertheless, the EU has taken an increasingly ‘cold-blooded’ approach, according to Michel Barnier, the EU’s Chief Negotiator. As a result, GBP investors are remaining cautious as we head into the weekend.
GBP investors will be looking ahead to this afternoon’s speech from Andrew Bailey, the Bank of England’s (BoE) Governor. Any dovish comments about the British economy’s performance – past and future – would prove Pound-negative.
GBP/EUR Forecast: Could Brexit Progress Buoy Sterling Next Week?
Euro (EUR) investors will be looking ahead to Monday’s release of the flash Germany harmonised index of consumer prices for August. Any significant improvement could buoy the single currency as investors become more hopeful of a recovery for the Eurozone’s powerhouse economy.
Pound (GBP) traders will be looking ahead to Tuesday’s release of the UK’s final Markit manufacturing PMI for August. If this beats forecasts, however, and rises from 55.3, then we could see Sterling head higher.
The GBP/EUR exchange rate will continue to be influenced by Brexit developments next week. Any further comments from the Government on a possible September post-Brexit trade agreement would prove Pound-positive.
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TAGS: Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts