GBP/EUR exchange rates have been highly unstable at present with some of the most volatile periods of trading on record. Back in Mid-February the rates had pushed beyond the key resistance level of 1.20 and were sat on a 3.5 year high. However, since that point in time the pound may have best been described as ‘in freefall’ as the rates tumbled to 1.05 on the 19th March which was weakest time to buy Euros in 11 years since December 2008 amidst the financial crisis.
Despite the slump, the pound has been making very positive and consistent inroads against the euro as the mid-market rate has now surpassed the 1.115 mark while paying tribute to the saying; what goes down, must come back up. Whilst the pound is not recovering as quickly as it lost its strength against the euro, there may be continued gains into April as the Eurozone continues to battle against rising deaths and infections from COVID-19 whilst the UK, recently put in lock down, are not seeing quite the same social and economic impacts as their continental counterparts.
PM Boris Johnson and Health Secretary Matt Hancock in Self-Isolation
On matter relating to the Coronavirus, both PM Boris Johnson and Health Secretary Matt Hancock both tested positive for the virus today and are now in self-isolation. This caused Sterling to take a momentary 0.7 cent plunge which quickly rebounded above the 1.11 levels. These are the latest developments as there are now 759 deaths and 14579 cases in the UK according to the BBC.
In the Eurozone
On developments surrounding the Eurozone, one of the key reasons that may attribute to the weakening euro is the rising tension between European leaders in how to go about dividing up the 37bn Euros taken from the EU budget to spend on containing and reducing the impacts of COVID-19. Such developments include Italy accusing other member states less affected by the virus as being too “timid” and pushed another meeting back to two weeks’ time to evaluate where to best invest the funds. Arguably many countries, Italy and Spain included, may need this investment much earlier than that however.
The accused weak response comes as many of the EU countries, of which 27 were present on the video-call, are suffering in varying degrees to the virus and consequently some countries require more immediate action than others. However, this disagreement has unsettled the currency markets somewhat as investors are not sure of the European outlook. Uncertainty was one of the big drivers for Sterling losses in the peak of the Brexit negotiations and seemingly that same type of shaded clarity is the same factor that is currently thwarting the single-currency.
For more insight into how these factors are impacting sterling to euro exchange rates, get in touch with me using the form below. I’ll be happy to get in touch and discuss your enquiry.