Late Thursday night, Eurozone leaders announced a financial package designed to help provide some confidence in the face of the economic uncertainty presented to single bloc economies by the Coronavirus pandemic.
Whilst the euro has been weaker because of investors lack of faith in the response so far, and this does so go some way to address the immediate concerns, the euro remained at similar levels to the close on Friday.
This is because the measures taken do not address the wider, deeper concerns over mutual debt obligations. Therefore the measures might be seen as more short term in nature, and not going far enough to address the more serious underlying issues that caused the Eurozone debt crisis in 2010-2015, that many argue is still a problem.
Finance ministers in the Eurozone agreed that countries could tap up to 2% of their Gross Domestic Product (GDP) from the European Stability Mechanism (ESM), a European bailout fund, with no conditions attached. This will pave the way for funds to be made available to help with the short-term costs for the countries in trouble because of economic disruption suffered from the lockdowns.
What can we expect next week for GBPEUR exchange rates?
For the UK and much of Europe, Monday is a bank holiday where many businesses and the markets will be closed. On Tuesday however, when the markets reopen there will be a shorter business week for the currency markets to contend with.
We will see the latest Eurozone Inflation data, which might well be a market mover, as investors seek to understand the continued economic impact of the Coronavirus. Whilst it is a quieter week of UK data, there is lots of US economic news which can prove important for GBPEUR exchange rates.
Rises and falls on the US dollar influence the EURUSD exchange rate, dragging the euro higher and lower against other currencies like the pound. Whilst sterling is being seen in a more positive light as the UK Prime Minister is reported to be in better health, there are still plenty of reasons for caution ahead as the COVID-19 pandemic continues to deal a major blow to the global economy.
Pound to euro rates have finished this week back above the 1.14 interbank rate, providing euros buyers with some of the highest levels in four weeks to buy euros with pounds.
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