GBP/EUR Stay Flat over EU Rescue Package
The Pound Sterling Euro exchange rate remained flat this morning on forex. The pairing was trading at around €1.1483.
GBP/EUR was left flat despite government plans of reopening economies, which boosted riskier assets.
In Italy, its government has allowed factories and building sites to reopen from 4 May to end Europe’s longest lockdown.
The euro remained under pressure as investors in the FX market worry about the rescue package for hardest hit countries.
Colin Harte, the Head of Strategy at BNP Paribas Asset Management in London said people are constrained in Europe. Whereas people in the US, UK, Australia, China and Japan can go to the printing presses if need be.
He also said he thinks there’s a little bit of a risk premium that’s creeping into the euro. That is on concerns about where to go from here.
In addition to this, the single currency remained under pressure as markets awaited Thursday’s ECB monetary policy meeting.
Meanwhile, the pound remained flat against the single currency following PM Boris Johnson’s warning against easing restrictions too early.
At the start of the week, GBP received a support offering. The forex exchange market hoped PM Johnson would announce plans to ease lockdown restrictions.
He said details on how some restrictions will be lifted will be revealed later this week.
GBP/EURO Outlook Await ECB Meeting this Week
Sterling remained under pressure after Kantar revealed British grocery sales rose 5.5% in the four weeks to 19 April.
This was down from a record 20.6% growth in March. Shoppers were building up stocks before the UK’s lockdown was announced.
However, GBP received some support as traders look forward to this week’s central bank meetings.
Markets expect officials from the US Federal Reserve and ECB to provide further stimulus to help fight the coronavirus.
Moreover, markets will be looking to Thursday’s ECB meeting which could cause the EUR to slide against the GBP.
Markets expect the European Central Bank to leave rates unchanged. Indecision and tensions surrounding a Eurozone rescue package leave them to expect further action.
However, forex traders are still expecting the ECB to provide further stimulus to support their county’s economy.
Commerzbank analyst, Thu Lan Nguyen said the major central banks are at comparatively expansionary levels. All of them have beefed up asset purchases and are close to the minimum lower interest rate bound.
They are likely to remain there for the foreseeable future, which would point towards relatively stable exchange rates, he added.
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