Sterling is beginning this week slightly lower against the lower at 1.1339 on the interbank rate, following the highs reached last week of 1.1439. Despite this drop, we remain some 8 cents higher than the lows of 1.0533 reached on the 19th March.
The Euro was the currency in the firing line last week as the lack of unity over the approach to tackle the growing economic crisis as a result of the COVID-19 pandemic intensified. A gulf appeared between where Germany, the Dutch and many in European government feel direction should be headed, versus the path Italy and other Spain wish to pursue.
There is a desire for European debt to packaged in one, with the whole of the Eurozone issuing debt in one bond, being termed ‘coronabonds’, rather than each country issuing its own bonds. With mounting concern over the economic impact of the pandemic, with Italian and Eurozone data all showing big falls last week, the Euro was sold off.
Will the Pound Rise Back to 1.20 or Fall Back to 1.05?
The news suggests this topic will remain in focus this week, as European leaders meet to try and develop a more collective response, any fresh developments in this story may influence the value of the Euro. Boris Johnson, the UK PM has been admitted to hospital for further tests following his Coronavirus scare.
There is important data this week with the latest UK GDP (Gross Domestic Product) data and Trade Balance figures. Whilst the economic news for the UK is also poor of later, with the all-important Services data on Friday showing a record fall, the pound has been benefitting from investor support behind the extensive measures being taken to shore up public finances in the UK.
Pound to Euro rates are almost in the middle of the recent high to low ranges, where GBPEUR visited 1.2072 before falling to 1.0533 on the interbank rate. Current levels which are 8 cents off the low, 7.5 cents off the high, might therefore reflect an interesting time for reflection on the ranges.
There has been a clear change in circumstances to warrant the moves within this range, if you are holding on waiting for 1.20, or indeed 1.10 or lower, it might be worth a chat with some of our experienced and expert team about all the events in the market that contribute and contributed, to these levels.
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