The euro look set to continue its difficult run as we end the week as this morning’s key inflation data takes the spotlight. After a week where we have seen consumer pricing across Europe’s major players dramatically contract with COVID-19 weighing heavily on demand, investors will be watching this morning’s Eurostat Consumer Price Index (CPI) release for clearer indications of market conditions across the single market. Should Spain and Germany’s worrying figures filter through to this morning’s release, further volatility on euro exchange rates could be expected.
Disparity in COVID-19 lockdown policies across Europe to frustrate or excite European investors?
Perhaps, another factor to the single currency’s recent demise is the mixed consensus around lockdown rules which is clouding clarity within the markets and halting investor confidence as a result. Despite record highs in new cases across Spain and France as testing is ramped up and containment policies extended, German leader Angela Merkel has initiated a gradual easing of movement restrictions. Indeed, small to medium sized shops and even some schools will reopen from the first week of May. The disparity in stance might well leave a number or investors uneasy and it will be interesting to see how the euro reacts in the weeks and months ahead as a result.
Importantly, the International Monetary Fund is due to meet this weekend ahead of next Tuesday’s key business sentiment survey (ZEW) from Germany. It will be interesting to see if the trends mentioned above are alluded to in both reports and as such could prove to be potential market movers for euro exchange rates at the start of next week.
How Might EUR GBP Exchange Rates Move in the Days Ahead?
Looking at recent price movement for EURGBP, we are currently trading close to a key support level in the mid 0.86’s on interbank exchange rates. Once this was breached previously, we have seen a strong drive from the pound, pushing the euro back towards the 0.80 mark. Euro holders have already suffered an 8% drop over last 30 days or so, it will be interesting to see if the pound can break through that key resistance level and make further inroads.
A test to the market’s faith in sterling could come early next week with key housing, average earnings and inflation due out from the UK due on Monday, Tuesday and Wednesday respectively. Should we see heavy contractions across the board a considerable reverse in trend for pound exchange rates could be expected. If you have a short term EURGBP requirement, you can register your interest on the link below so we can help you plan around these events and limit your exposure.