The pound has battled its way back against the euro, rising to a three-week high on Friday morning of 1.1439 on the interbank exchange rate. This fresh high was ultimately short-lived with sterling losing ground against the single currency following the release of the latest UK Services PMI data that same morning, which showed the lowest level of activity in this sector since records began.
The reading of 34.5, on a measure where anything below 50 represents a contraction, was of concern to the markets and saw sterling lose value. The pound had steadily been climbing against the euro all week, partly on the concerns in the Eurozone over the lack of a unified response by the European authorities, in response to the COVID-19 slowdown.
Whilst there has been various piecemeal responses by individual countries in the Eurozone, the markets are pushing for a more coordinated response to raise confidence. When contrasted against the significant response by the British and US governments, there is perhaps more the Eurozone authorities and governments could be doing.
In particular, there is a call for more to be done by lumping together all Eurozone debt in a ‘Eurobond’ which would tie the economies in together in a much tighter manner. This is being resisted so far by the European Central Bank and Germany, who are concerned at the implications.
Will GBPEUR Exchange Rates Rise Higher Next Week?
Any optimism over the GBPEUR rate rising further was dealt a blow by the poor UK data from last week, and reminds us how fragile and sensitive exchange rates can be. Having said that, the economic data for the Eurozone was also poor, and it might be that further worse data sees the Euro under pressure once again.
Next week is the latest UK GDP (Gross Domestic Product) growth data, which can be a market mover. For the Eurozone, we will also have the latest meeting minutes from the ECB meeting, where we will learn of further insight into the decision making the ECB, which might influence the Euro.
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