Pound to Euro Forecast: GBP Soars 3% Higher as Bank of England Combats Coronavirus

GBP to USD Rate: Sterling Surges Almost 7% in a week of Extreme Volatility

The pound sterling soared 3% overnight following the decision by the Bank of England (BoE) to cut its interest rate and significantly boost its quantitative easing programme while similar moves by the European Central Bank seem to have subdued the euro’s strength. The Pound also bolstered its strength as it saw a rally following an announcement from UK PM Boris Johnson yesterday in which he indicated the UK government may reveal more plans for the protection of jobs and wages over the course of today. Something which pricked up the ears of investors and workers alike as many feared for the economy and jobs sector amid the onslaught from the coronavirus. If the government makes any announcements today concerning jobs or wages, the pound will likely rise higher against the euro. Meanwhile, for the euro it saw losses against the pound as the European Central Bank (ECB) have been accused of a wrong-footed approach to the crisis which is almost certain to end in a recession.

Bank of England Throws All It Can at the Coronavirus – and It Seems to Be Working

Sterling appreciated by 3% yesterday as the Bank of England announced a further emergency interest rate cut which saw the rate drop from 0.25% to 0.1%. In making the move, the UK central bank noted that “over recent days, and in common with a number of other advanced economy bond markets, conditions in the UK gilt market have deteriorated as investors have sought shorter-dated instruments that are closer substitutes for highly liquid central bank reserves. As a consequence, UK and global financial conditions have tightened”. Alongside this move the BoE also highlighted that it had increased its government and corporate bond holdings by £200BN in an unanimous decision aimed at fending off the detrimental impact of the COVID-19 pandemic.

UK Poised to Receive Another Stimulus Release Today

Yesterday also saw an announcement from UK PM Boris Johnson, in which he indicated the UK government may reveal more plans for the protection of jobs and wages over the course of today. This could see the pound rally against the euro as the continuity of the UK economy relies on its workforce and with reports of workers being laid-off due to the virus uncertainty, a stimulus package from the UK government could provide the respite needed to calm the nerves around the UK’s economic outlook.

Euro Remains Under Pressure From ECB’s Actions

Meanwhile, the euro has seen a shock turnaround from best performer to one of the more vulnerable currencies over the course of the week. The ECB’s announcement on Wednesday that saw the Governing Council agree to make €750BN available to the Eurozone via the purchase of public and private securities did little to support the single currency as the market noted that the Eurozone may have wrong-footed its approach – which could lead to an almost certain recession up ahead.

The pound to euro exchange rate was 2.77% higher earlier today at 1.09 but had been as high as 1.0956 at one point. The day’s low is at 1.0524 so far as we head into the weekend and the end of trading.

If you’d like to discuss these factors and how they could impact your currency exchange, you can get in touch to ask a question using the form below. I’ll be happy to contact you personally and discuss your enquiry.