The GBPEUR rollercoaster continues with interbank rates fluctuating today between 1.078 and 1.1042. In a more ‘normal’ market, this might be the movement in a week, not just a few hours! The pound to euro exchange rates has been experiencing increased movements at the hands of the Coronavirus, as the currency markets react to the ongoing shifts in sentiment towards the various currencies.
Overnight, the pound was dealt a boost by the US announcement of a two trillion US dollar stimulus package to shore up confidence. This helped the pound strengthen as it gave the market confidence that there is support for the global economy ahead.
However, throughout the course of today, that confidence has gently faded, reopening the very difficult question of are the measures being mooted enough? GBPEUR has slipped from the highs of 1.1042, back into the 1.08-1.09 range, as sterling suffers from anxiety about how the UK and the pound will ultimately be affected by COVID-19.
Where Next For the Pound to Euro Rate?
Global confidence is a difficult and fragile sentiment to engineer, as the markets are finding out. With all the central banks having exhausted their firepower to well above pre-2010 levels, the market is wondering how the world will respond further to any prolonged downturn.
The UK is now on lockdown, and as the lockdown in Italy and across Europe persists, one has to wonder how this will influence the respective economies. Yesterday, we had a flash release of Eurozone Purchasing Managers Index (PMI) which gives a snapshot of the latest economic data. The data was not promising, pointing to a reading of 28.4, below the 50 reading which would indicate expansion, this was the lowest reading since monitoring began in 1998.
For the UK, the same figures pointed to a record low of 35.7 indicating the concerns and worries in the business sector. This does not provide too much confidence and the outcome of such data may well raise further tough questions for policy makers, investors and the currency market in deciding the value of the GBPEUR pairing.
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