Pound to Euro Forecast: Volatility Expected for GBP/EUR as Coronavirus Ramps Up Pressure in Europe

Pound to Dollar Rate Drops to One-month Low

The coronavirus has taken no prisoners in its global spread from its epicentre in Wuhan, China. Europe is one of the most affected areas outside of China, with Italy, Spain, Denmark and Norway amongst others going into lockdown in an attempt to contain the virus. The pound to euro exchange rate closed its worst week since October 2016 at the end of last week following a 4% loss, but it faces volatility as the severity of the spread of COVID-19 is set to increase throughout Europe this upcoming week. The risk of further hits to the UK economy could also be on the horizon as the UK epidemic gathers pace.

Market Volatility From Last Week Expected to Continue Into This Week

Last week saw extreme volatility in the market, especially after Thursday’s losses put many stock indices on course for their worst week in history before the US Federal Reserve’s actions and a significant announcement from President Donald Trump saw them more-than reversing earlier losses. However, despite this the pound got almost no relief whatsoever. GBP fell sharply against most of its major rivals in the trading market last week, setting the euro up for gains against the British currency.

GBP Expected to Drop, With EUR Benefitting

Expectations suggest that the EUR/GBP outlook looks positive. Therefore, EUR traders could be wise to follow the developments of this week for their best chance to strike with a currency transfer. GBP is being pushed to levels only really been seen when the market’s ‘no deal Brexit’ fears were at their most severe. Losses of last week’s proportion should mean that the pound is owed some respite but considering an unprecedented situation around coronavirus, only time will tell what the week ahead will offer.

In the week ahead, GBP investors will be hoping that the UK government can impose a stricter policy regarding their containment efforts of COVID-19. So far, the efforts have only been bumped up to the ‘delay’ phase, which sees public schools remain open. Meanwhile other countries like Italy are on nationwide lockdown with schools closed and travel in and out of the country prohibited. The market has noted that looking ahead, the only two factors that matter to investor sentiment and financial market conditions will be coronavirus data and global policymaker’s reactions to the crisis.

If you have an upcoming currency transfer and would like to learn more, you can contact myself, Tom Holian directly using the form below.