The pound to euro interbank exchange rate slumped this morning, leaving the pair trading at around €1.1901. The pound sterling slipped against the euro earlier today, as traders panicked over the coronavirus’ potential to become a pandemic. As the Centers for Disease Control and Prevention (CDC) has urged Americans to prepare for the virus to spread within the country, the world reacted. With other US officials suggesting that it was more of a question of when not if, concerning the virus’ chance to spread throughout the US. Despite being battered by fears of the COVID-19 spread, the euro surprisingly edged higher as the current risk-off mood allowed the Euro to advance.
Euro survives coronavirus fears but weak Eurozone business confidence to weigh on EUR
The coronavirus has now spread into Europe with COVID-19 cases springing up across several European countries like Austria, Croatia and Switzerland all announcing cases. However, the euro appears to have edged higher despite previously being a victim of the fears. The risk-off mood has favoured the euro in this case.
Looking forward, the euro could slump against the pound following the release of Eurozone business confidence. If the February business confidence falls further than expected, it will stand to damage the single currency’s sentiment. However, the losses could be capped following the release of the bloc’s final consumer confidence measure. If consumers within the Eurozone are more confident than expected this month, the pound to euro exchange interbank exchange rate will remain muted.
Pound shows signs of rebounds from earlier losses over coronavirus fears
Starting the week, the pound slumped as traders became increasingly worried about the chances of the virus turning into a global pandemic. However, the pound was able to rebound on Tuesday as markets fretting over the spread of the coronavirus found some stability. This caused traders to move away from ‘safe haven’ currencies like the US dollar and rushed back to currencies like Pound Sterling. Monday’s GBP sell-off was mainly due to the dollar weighing on the pound. But investors are now reverting to GBP after the odds of an interest rate cut from the US Federal Reserve climb higher.
Meanwhile, markets look on to next week’s trade negotiations between the UK and the EU. The divisions between the two sides continued to weigh on GBP, as the two set out their cases in a confrontational manner. The EU noted on Tuesday that the process would be increasingly hard and could fail if the UK is unable to secure the Irish border as previously agreed. The EU is also looking for the UK to retain many of the EU’s regulations, it stated in Tuesday’s mandate document. The market is expecting to see the converse from the UK on Thursday when they deliver their own mandate.
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