Pound to Euro Exch Rate Falls, ECB Rates
The Pound to Euro exchange rate dipped in forex today, with the pairing currently trading at around €1.100.
The Euro edged higher against Sterling. This was after the European Central Bank (ECB) held its interest rate at 0%.
With worries over the Covid-19 pandemic rising, many EUR investors remain cautious.
ECB’s Chief Economist, Philip Lane, recently argued that Europe faces a ‘two step forward, one step back’ road to recovery.
Berenberg economist Florian Hence said the ECB can hardly relax, its job is far from done. Despite the ongoing recovery, the risk to outlook remains tilted towards the downside. This includes the risk of a major second wave of the pandemic and harsh nationwide lockdowns in major European economies.
Nevertheless, the interest rates are on hold for the foreseeable future. With that, EUR investors have taken some refuge in hopes that Germany’s economy may be leveling out.
Pound Falls with Rising Joblessness
The Pound struggled in the FX market today after unemployment figures revealed that nearly 650,000 people remained unemployed. This is as the coronavirus continues to ravage the British economy.
The Office for National Statistics reported that unemployment stood at 3.9% in May. It’s better than the expectations of a 4.2% increase. Many analysts commented that these numbers are not showing the full extent of Britain’s unemployment crisis.
Jing Teow, senior economist at PwC, said that the monthly data paints a more hopeful picture. There are early signs of recovery.
Actual hours worked on a weekly basis showed signs of increasing numbers in May. The decline in vacancies and the claimant count saw signs of tailing off in June. This shows that the reopening of the economy has had a positive impact.
News in the UK reports that sterling investors will await this evening’s release of the GfK Consumer Confidence gauge for July. If this shows any signs of improvement, then they could see the GBP claw back some of its losses.
Euro investors will be looking ahead to tomorrow’s release of the latest inflation data. If there is improvement, then we could see the single currency edge higher. This is on the renewed hopes for the bloc’s economic recovery.
Friday will also see the European Union Leaders Special Summit. However, any dovishness about cohesion within the EU, or concerns over its economic performance, could prove EUR-negative.
Forex news reports GBP/EUR exchange rate will remain sensitive to the country’s economic situation. Consequently, the sterling could suffer from any indications that UK-EU trade talks will remain in a deadlock.
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