GBPEUR bounced back 0.7 percent yesterday, following two days of losses and has edged higher again this morning. GBPEUR is now trading at 1.1414 but remains down over the course of the week. UK coronavirus cases have now surged to 133,500 with a death toll of 18,100.
Despite an immediate bounce back, the pound’s future remains uncertain. For those hoping to return to a normal way of living after the current lockdown, those hopes have been dashed by Chief Medical Officer, Chris Whitty, who warned that restrictions will be in place for a long time. Mr Whitty said that a vaccine within 12 months is unlikely and that the public will need to maintain social distancing to keep coronavirus cases low. The longer the restrictions remain in place, the more devastating the impact will be on the economy. This is despite Oxford University beginning human testing on a vaccine today, which they add, could be available before the end of the year.
UK Government Maintains Stance on No Brexit Extension Past December Deadline
The UK government is still refusing to extend the Brexit deadline. UK and EU officials have been continuing talks this week and whilst there has been no official release, it has been reported that talks have been constructive. Investors had widely expected the UK to extend the transition period, given the current coronavirus crisis, but some are now hesitant that prime minister Johnson could push for a bare-bones trade deal this year, which would put huge pressure on the pound over the coming months.
EU Views €2 Trillion Rescue Package to Tackle the Crash
The European Union’s nation leaders will hold a conference call today to discuss the coronavirus crisis and what steps they next take. The European Commission has proposed a €2 trillion rescue package to help deal with the consequences of the pandemic. One EU official has reported that the EU is anticipating the economy to contract by up to 10 percent this year. The European Union has struggled to show a united front as the richer, northern states, led by Germany, resist any finance package that results in debt mutualisation. Whereas countries in the south such as Italy and Spain but also supported by France, want a consolidated effort in the form of Eurobonds, where all nations share the dent burden. The European Commission has not released details of its proposal, but it is understood the package would involve building part of the debt into the 2021-2027, budget as well as borrowing on the open market. After weeks of discussions, pressure is mounting on EU leaders to reach an agreement as the economic consequences of delay become clearer.
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