Euro to Pound Rate Remains Strong, Will This Continue?

EUR GBP Stumbles Ahead of Quiet Data Week

Euro to pound exchange rates have remained strong against the pound, as Sterling continues to feel the effects of the pandemic. The lack of progress of the Brexit talks has appeared to stunt Sterling’s recovery vs the euro and we should find out soon whether or not the UK will intend to extend the Brexit talks.

Across the globe stock markets have fallen owing to the concern of a second wave of the Coronavirus outbreak. The FTSE has had its biggest fall in over ten days falling by as much as 3%. Spikes have occurred in parts of both China and the US and we have also seen some outbreaks in food markets in various areas.

Euro exchange rates have remained in a fairly tight range vs the pound even though there was further news on tariffs on EU goods between them and the US. With the American elections due to be held later this year this could be one of Trump’s attempts to put his ‘America First’ policy in to the spotlight once again. His current popularity ratings are relatively low at the moment owing to the handling of the pandemic so could this be another way for him to appeal to the US electorate by prioritising US based companies over foreign imports?

Bank of England Quarterly Bulletin to influence Euro exchange rates?

Later today the Bank of England will release their latest Quarterly Bulletin which is likely to be very different than previous announcements. This period will cover the issues caused by lockdown so it will make interesting reading and it could provide some hints as to what the Central Bank may be looking to do when they meet again for their next monetary policy meeting.

Next week the UK chief negotiator Frost will be meeting in face to face discussions with the European Union to try and attempt to move the talks forward. Brexit has been a huge influence on pound sterling to euro exchange rates so this should also be closely monitored as if the discussions go well this could help Sterling exchange rates. However, if a continued block between the two parties carries on then this could see the euro possibly strengthen or at least maintain its current value vs the pound.

Yesterday the European Central Bank’s monetary policy accounts confirmed that their recent monetary policy measures and fiscal response has helped to reduce the risks to the downside. They also suggested that they are ready to act once again if required and confirmed that they have all the instruments in place if necessary to steady the ship once again.

The European Central Bank has also confirmed that it did what was needed at the time to stabilise the Eurozone’s economy as well as countering the serios risks to price stability.

Coronavirus Still on the Rise in the US

Turning the focus towards the US, it has become apparent that the world’s largest economy is still struggling to combat the increase of the virus. On Thursday the US confirmed another 37,000 recorded cases which is a real concern. As Europe appears to have started to regain control against the outbreak there are fears mounting that we could be seeing a second wave.

The governor in the state of Texas Greg Abbott has stopped the reopening of the state as Houston appears to be running out of hospital beds to deal with the virus. Another three states in the US have also halted the reopening of their economies as they have similar concerns.

As the leading economy, any weakening of the US dollar can often help to strengthen the value of the euro so depending on how the US economy performs in the near future could have an influence of the value of the euro vs the pound.

We end this week with the release of US personal spending for May so could this highlight the problem that the US has faced during the period of lockdown. This comes out this afternoon so pay close attention to the data release.

If you would like a free quote when buying or selling euros, or to discuss how these factors are likely to impact euro exchange rates, feel free to contact me directly.