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Pound Euro Exchange Rate Edges Higher as UK ‘Set Fair’ to Easing Lockdown Restrictions in July

June 28, 2021 - Written by John Cameron

GBP/EUR Exchange Rate Rises on Optimism Over Easing of Lockdown Measures Next Month

The Pound Euro exchange rate rose by 0.2% today after UK Prime Minister Boris Johnson said the UK is ‘set fair’ for lifting the remaining Covid-19 lockdown restrictions on 19 July. The pairing is currently fluctuating around €1.16.

Commenting on the new health secretary, Sajid Javid, Boris Johnson expressed confidence in the lifting of lockdown measures next month. Mr. Johnson said:

‘You will be hearing a statement from Sajid Javid in the House later on this afternoon about where we are in the pandemic, the steps that we are going to be taking. I think we are looking set fair for 19 July.’

As a result, Pound investors have become more confident about the outlook for the British economy, especially now that the Government appears confident about the lifting of restrictions in July.

Sterling is showing signs of recovery after the unexpected resignation of former health secretary, Matt Hancock, over the weekend following his break of social distancing guidelines.

In absence of UK economic data today, Pound traders are instead focusing on the Government’s latest announcement.

If Sajid Javid confirms that Downing Street is all set to ease lockdown restrictions next month, then the Pound Euro exchange rate would head higher.

Euro (EUR) Exchange Rate Falls Despite Growing Confidence in Eurozone Economy

The Euro (EUR) struggled against the Pound today despite growing confidence in the Eurozone’s economy. Last week saw reports that the bloc is heading toward pre-pandemic levels of growth.

Chris Williamson, the chief business economist at IHS Markit, commenting on the latest Eurozone PMI data, was also optimistic about the outlook for the European economy. Williamson said:

‘The Eurozone economy is booming at a pace not seen for 15 years as businesses report surging demand, with the upturn becoming increasingly broad-based, spreading from manufacturing to encompass more service sectors, especially consumer-facing firms.’

Th European Union’s (EU) extensive vaccination efforts have driven down Covid-19 infections allowing key economies such as Germany and France to ease lockdown restrictions.

Eurozone economic growth is expected to expand in the second quarter and grow even stronger in the third quarter of this year.

As a result, the Euro could creep higher this week if confidence in the Eurozone’s economy is sustained.

GBP/EUR Exchange Rate Forecast: Could Confidence in the Easing of UK Lockdown Restrictions Boost the Pound?

Euro traders will monitor tomorrow’s speech from Christine Lagarde, the President of the European Central Bank (ECB).

Any hawkish comments about the Eurozone’s economic future from Lagarde would be EUR-positive.

German inflation data will also be in focus this week. Could a robust German economy – the largest in the Eurozone – drive-up the EUR/GBP exchange rate.

Pound investors will eye tomorrow’s UK housing data and mortgage approval figures for May and June.

If the outlook for the UK economy continues to improve, then the Pound could head higher against the single currency.

In addition, if the UK Government is more confident about easing lockdown measures next month, then the Pound Euro exchange rate would rise.

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